Steps to­ward trans­parency

Health or­ga­ni­za­tions need to be open with con­sumers about pric­ing

Modern Healthcare - - OPINIONS/COMMENTARY - Joseph Fifer Joseph Fifer is pres­i­dent and CEO of the Health­care Fi­nan­cial Man­age­ment As­so­ci­a­tion.

From in­dus­try me­dia to your home­town news­pa­per, news about the push for trans­parency in health­care pric­ing is hard to miss th­ese days. What is im­por­tant to un­der­stand is that this em­pha­sis on trans­parency is here to stay. The next step— in­deed, the only step—for health­care or­ga­ni­za­tions is to em­brace this new en­vi­ron­ment.

The Health­care Fi­nan­cial Man­age­ment As­so­ci­a­tion has been beat­ing the drum on trans­parency for years. Our Pa­tient Friendly Billing pro­ject and other HFMA re­sources have helped all health­care stake­hold­ers—hos­pi­tals, physi­cians, pay­ers, em­ploy­ers, gov­ern­ments and con­sumers—to un­der­stand and ad­dress the bar­ri­ers that stand be­tween the cur­rent sys­tem and pos­i­tive pa­tient fi­nan­cial in­ter­ac­tions, tack­ling is­sues rang­ing from ra­tio­nal pric­ing to pro­vid­ing es­ti­mates of pa­tient pay­ment re­spon­si­bil­ity to com­mu­ni­cat­ing about fi­nan­cial as­sis­tance.

De­spite th­ese ef­forts, an ugly fact re­mains. Amer­i­cans over­whelm­ingly view health­care pric­ing as con­fus­ing, con­vo­luted and even se­cre­tive. When pa­tients call health­care or­ga­ni­za­tions to in­quire about the price of a pro­ce­dure, providers are of­ten un­able or un­will­ing to pro­vide that in­for­ma­tion. What has cre­ated this sit­u­a­tion? It is a num­ber of fac­tors, from govern­ment reg­u­la­tions to an­titrust leg­is­la­tion to in­sti­tu­tional cul­tures.

The over­whelm­ing ma­jor­ity of health­care pro­fes­sion­als are good, ra­tio­nal ac­tors who are sim­ply do­ing their best to func­tion in a sys­tem that has be­come ab­surd. To­day, nearly half of hos­pi­tal rev­enue comes from Medi­care, Med­i­caid and other govern­ment pro­grams, yet the ma­jor­ity of providers lose money on th­ese pa­tients. Hos­pi­tals also of­ten lose money in the course of pro­vid­ing vi­tal ser­vices that com­mu­ni­ties de­mand, such as burn units and in­pa­tient psy­chi­atric units. As in other busi­ness en­vi­ron­ments, short­falls such as th­ese must re­sult in price ad­just­ments else­where. In the case of health­care, the goal is sim­ply to achieve a mod­est mar­gin—enough to en­sure an or­ga­ni­za­tion has the fi­nan­cial health to make the in­vest­ments nec­es­sary for high-qual­ity care.

Hos­pi­tals are also ham­pered by com­plex pay­ment struc­tures. Larger or­ga­ni­za­tions might be deal­ing with up to 100 pay­ers at a time, each one with its own con­tract­ing and pay­ment ar­range­ments. In ev­ery case, it is up to the or­ga­ni­za­tion pro­vid­ing the health­care to ad­just to th­ese sys­tems. Not to men­tion the com­plex­ity of the

Con­sumers and their ad­vo­cates are be­gin­ning to ask se­ri­ous ques­tions about the costs of care.

Medi­care and Med­i­caid pay­ment method­olo­gies.

Fur­ther, as em­ploy­ers in­creas­ingly are en­cour­ag­ing em­ploy­ees to take part in high­d­e­ductible health plans, con­sumers and their ad­vo­cates are be­gin­ning to ask se­ri­ous ques­tions about the costs of care, and to shop for the best pos­si­ble value they can find. The advent of health in­sur­ance ex­changes un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act will fur­ther this trend. Th­ese con­sumers are con­fused by the cur­rent en­vi­ron­ment, in which health­care or­ga­ni­za­tions are fre­quently un­able to fore­cast what a pro­ce­dure might cost or the pa­tient’s fi­nan­cial re­spon­si­bil­ity for that cost.

It is time to move to­ward a pric­ing sys­tem that is fair, sen­si­ble and open.

As we saw with last month’s re­lease of CMS pric­ing in­for­ma­tion, there is a tremen­dous ap­petite to know what med­i­cal pro­ce­dures cost. Health­care fi­nan­cial lead­ers need to act now to pre­pare their or­ga­ni­za­tions for the trans­parency de­mands that are at our doorstep. Only by em­brac­ing this con­cept will mean­ing­ful price trans­parency—in­clud­ing the data now be­ing sought—be pos­si­ble. To lead this ef­fort, the HFMA is form­ing a task force with con­sumer, em­ployer, payer, physi­cian, govern­ment and hos­pi­tal rep­re­sen­ta­tion to de­velop guide­lines for mean­ing­ful pre­sen­ta­tion of price. This is part of a larger ef­fort HFMA is launch­ing to pro­mote fair fi­nan­cial prac­tices, which will in­clude best prac­tices for pa­tient fi­nan­cial in­ter­ac­tions and med­i­cal debt res­o­lu­tion.

Achiev­ing mean­ing­ful trans­parency will re­quire tak­ing solid steps, some large and some small. At a high level, or­ga­ni­za­tions need to de­velop a well-de­fined, ra­tio­nal and com­pet­i­tive price struc­ture. This needs to be up­dated, amended and re­designed when changes to the mar­ket or in­sti­tu­tional changes make it ap­pro­pri­ate. The im­por­tant thing is to get de­vel­op­ment un­der­way.

Health­care or­ga­ni­za­tions will also need to de­velop for­mal poli­cies for pro­vid­ing th­ese es­ti­mates to pa­tients, and will have to be clear about what they do and do not cover. Hos­pi­tals may want to adopt pric­ing strate­gies that make dis­counts avail­able for pa­tients of limited means, while at the same time un­der­tak­ing po­ten­tially dif­fi­cult ne­go­ti­a­tions with in­sur­ers to re­move con­trac­tual im­ped­i­ments to ra­tio­nal pric­ing.

Fi­nally, health­care or­ga­ni­za­tions must ed­u­cate their com­mu­ni­ties about what they do and how they do it. Or­ga­ni­za­tions should not be shy about em­pha­siz­ing the valu­able ser­vices they pro­vide to the com­mu­nity, around the clock, and of­ten at an op­er­at­ing loss. It is not enough to be open only about prices. Be­ing open about what it takes to op­er­ate a health­care fa­cil­ity and keep it in the black will help con­sumers to un­der­stand the costs as­so­ci­ated with care.

There also could be un­seen ben­e­fits. For ex­am­ple, by get­ting con­sumers to think more about what they are spend­ing for care, they might de­cide to take their own steps to pre­vent chronic or pre­ventable con­di­tions, adopt­ing health­ier life­styles.

It is time to re­duce the bar­ri­ers to trans­parency as a first step to­ward a sys­tem that is ra­tio­nal and sen­si­ble. While this step will in­volve con­sid­er­able chal­lenges, the re­sult­ing value to both health­care or­ga­ni­za­tions and con­sumers will be worth the ef­fort.

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