The tough ter­rain of trans­par­ent pric­ing

Modern Healthcare - - BEST PRACTICES - By Har­ris Meyer

Scott Pow­der, Ad­vo­cate Health Care’s chief strat­egy of­fi­cer, had a frus­trat­ing ex­pe­ri­ence try­ing to price shop for an MRI for his daugh­ter. That’s part of what led him to em­bark on a two-year ef­fort to make his sys­tem’s pric­ing sim­pler and more trans­par­ent for con­sumers.

“We’ve made a lot of progress, but ev­ery time you take two steps for­ward, you of­ten have to take a half-step back,” Pow­der said.

Last year, Ad­vo­cate un­veiled flat prices on cer­tain ser­vices for self-pay pa­tients at its 56 ur­gent-care clin­ics lo­cated at Wal­greens stores and at its Ad­vo­cate Med­i­cal Group out­pa­tient cen­ters in the Chicago area.

The Down­ers Grove, Ill.-based sys­tem is charg­ing $60 for chil­dren’s phys­i­cals for sports teams or camp, and $70 for adult phys­i­cals for em­ploy­ment or life in­sur­ance. It’s charg­ing $89 for treat­ment by a nurse prac­ti­tioner of 30 com­mon ill­nesses and in­juries such as ear­aches, res­pi­ra­tory in­fec­tions and uri­nary tract in­fec­tions. The sys­tem pre­vi­ously based charges on the ser­vices de­liv­ered in each case and the site of ser­vice.

Now Ad­vo­cate is work­ing on ex­tend­ing the fixed-price pol­icy to di­ag­nos­tic-imag­ing pro­ce­dures, com­bin­ing the fa­cil­ity and pro­fes­sional charges into one uni­fied price. A small but grow­ing num­ber of health sys­tems are think­ing “more like re­tail­ers” and es­tab­lish­ing clear pric­ing strate­gies to com­pete for con­sumers who face ris­ing out-of-pocket costs un­der high-de­ductible health plans, ac­cord­ing to a re­port from the PwC Health Re­search In­sti­tute.

“That’s what re­tail or­ga­ni­za­tions have been do­ing for­ever, of­fer­ing a con­stant price that’s at­trac­tive in the mar­ket­place,” said Joe Fifer, CEO of the Health­care Fi­nan­cial Man­age­ment As­so­ci­a­tion. “We haven’t had to do that in health­care be­cause we haven’t been a con­sumer-fac­ing in­dus­try. That has to change.”

Ad­vo­cate an­a­lyzed 35 dif­fer­ent rea­sons peo­ple would come in for sick care and what the sys­tem would bill in­sur- ance or what peo­ple would pay out of pocket. The ball­park fig­ure it came up with was $89. “We might lose a few dol­lars on a strep test, but it should have a neu­tral ef­fect,” Pow­der said.

Ad­vo­cate has re­ceived pos­i­tive feed­back from pa­tients about the op­tion to pay the fixed price out of pocket rather than billing in­sur­ance. But so far only about 10% of pa­tients in the Wal­greens clin­ics and Ad­vo­cate Med­i­cal Group cen­ters have taken ad­van­tage of it. “I don’t know why they’re still de­fault­ing to in­sur­ance,” Pow­der said. “It may be that’s what they’re used to.”

An­other leader on price trans­parency is Toledo, Ohio-based ProMed­ica, which re­cently launched an on­line tool that es­ti­mates pa­tients’ out-of­pocket cost for the hospi­tal part of lab, ra­di­ol­ogy and surgery ser­vices. It was driven at least partly by a new state law that was sched­uled to take ef­fect this month but has been de­layed. It will re­quire providers to of­fer con­sumers a good-faith es­ti­mate of the amount the provider will charge the pa­tient’s health plan, the amount the plan in­tends to pay and the dif­fer­ence, if any, that the pa­tient must pay.

Us­ing ProMed­ica’s new on­line price es­ti­ma­tor, con­sumers en­ter their name, the pro­ce­dure they seek, their in­sur­ance com­pany and their pol­icy ID num­ber. The tool con­sid­ers ProMed­ica’s con­tracted rate with that in­surer, along with the pa­tient’s coin­sur­ance and cur­rent de­ductible sta­tus, and pro­vides an out-of-pocket cost es­ti­mate.

ProMed­ica has been work­ing on its price trans­parency and strate­gic pric­ing ini­tia­tive in part­ner­ship with the Ad­vi­sory Board and other health sys­tems in­clud­ing BJC Health­Care, Caroli­nas Health­care Sys­tem and Bay­lor Scott & White Health. The col­lab­o­ra­tion has helped the sys­tems more quickly fig­ure out what works and what doesn’t.

One big chal­lenge is ob­tain­ing re­al­time in­for­ma­tion from health plans. “We’re in the po­si­tion of not hav­ing per­fect in­for­ma­tion about whether the pa­tient has met out-of-pocket max­i­mums,” said Jered Wil­son, ProMed­ica’s vice pres­i­dent for re­im­burse­ment.

An­other is­sue is that ProMed­ica’s es­ti­mate re­flects only fa­cil­ity fees and not pro­fes­sional fees, which are billed separately by physi­cians. “It could be a dis­as­ter if the pa­tient doesn’t know the pro­fes­sional fee, but this is a work in progress,” said Doug Bush, ProMed­ica’s as­so­ciate vice pres­i­dent for strate­gic plan­ning.

The sys­tem hopes to ex­pand the num­ber of ser­vices for which pa­tients can re­ceive on­line es­ti­mates, look­ing first at other “shop­pable” ser­vices such as phys­i­cal ther­apy.

While Ad­vo­cate’s and ProMed­ica’s ini­tia­tives are en­cour­ag­ing, the HFMA’s Fifer voiced frus­tra­tion at the slug­gish move­ment on price trans­parency. “We’ve demon­strated as an in­dus­try that we’re not mov­ing as fast as the con­sumer side of things, with higher de­ductibles and co­pays,” he said. “I wish I knew the sil­ver bul­let.”

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