The CMS Price Transparency Final Rule: What Hospitals Need to Know
In less than two months, hospitals across the U.S. will be required to make their price information publicly available, including the specific reimbursement and payment rates they have with third-party payers.
Despite significant pushback from the hospital industry on the proposed price transparency rule published in July 2019, the rule was finalized last November with most of the requirements as proposed. At the time, the Centers for Medicare & Medicaid Services (CMS) pushed the effective date to January 1, 2021 to give hospitals more time to implement the requirements.
While it’s true that complying with the new rule is going to take up time and money, this mandate for price transparency is more than just a call for hospitals to openly share price information. It represents an opportunity to better serve consumers and create stronger brands while building trust and loyalty, which is more important than ever amid the uncertainty of the COVID-19 public health emergency.
Last December, I wrote about how price transparency represents a significant milestone on the road to a more consumer-centric healthcare ecosystem. Here’s a rundown of what hospital leaders and providers need to know about the new rule, and strategies for creating a consumer-centered digital patient financial experience.
The Price Transparency Rule in a Nutshell
There are three key provisions hospitals need to follow to comply with the new hospital price transparency rule:
- Publish an expanded definition of “standard charges,” which includes gross charges (chargemaster), payer-specific negotiated charges, discounted cash prices, and de-identified minimum and maximum negotiated charges.
- Post negotiated and self-pay pricing for 300 “shoppable services.” Note: Hospitals that provide estimates for these services using patient-facing estimation technology are exempt from this provision.
- All pricing information needs to be in a consumer friendly, searchable format that is easily accessed on the hospital website by January 1, 2021.
Additionally, CMS will be monitoring compliance via complaints submitted from individuals or entities. If found to be non-compliant, a healthcare organization could be subject to a civil monetary penalty (CMP) of $300/day with a notice of imposition published on a CMS website.
The Patient Protection and Affordable Care Act began the push to a more consumer-friendly healthcare landscape with its mandate to develop a price transparency law in 2010. As deductibles and out-of-pocket expenses have soared over the last decade, patients have increasingly demanded to know their financial responsibility upfront.
Why This Rule is Important to Consumers
In a 2019 survey from TransUnion Healthcare, 49% of patients said having a clear estimate of financial responsibility would impact whether they visit a certain provider. Better price transparency may lead to more patient payments — the same survey revealed that 65% of patients would make a partial payment at the time of care if they had a price estimate.
The CMS price transparency rule aims to allow patients to estimate their cost-sharing before receiving health services. The goal is twofold: to empower consumers to make more informed healthcare decisions and to encourage competition among providers, ultimately driving better quality and lower costs.
With the push from both regulators and consumers, it is incumbent on healthcare providers to offer a positive financial experience to their patients
An Opportunity for Providers
Many healthcare organizations have expressed concern that complying with the CMS mandate will be burdensome. In fact, CMS estimates each hospital will spend an average of 150 hours and nearly $12,000 to review and post their standard charges for 2021.
The good news is that the benefits of offering greater price transparency can more than offset the costs, especially as healthcare continues to take a digital turn. When you give consumers a view into the prices they will pay for services, you’re also giving them the opportunity to plan and obtain financing or financial assistance, if needed. Your organization can benefit by providing an excellent customer experience, increasing patient payments, and driving consumer loyalty.
Last year, we did a podcast around how healthcare providers could differentiate their brand, drive consumer loyalty, and build trust with a proactive, technology-driven approach to price transparency. Specific steps organizations can take to create a digital financial patient experience include:
- Review and refine your organization’s pricing strategy to boost your competitive advantage
- Assemble a multi-disciplinary task force to identify processes and workflows that can be digitized
- Train staff to be readily able to address consumer questions
- Invest in educating patients on pricing and financial options
- Offer a personalized experience from pre-service to post-service
- Consider a consumer-friendly estimation tool to provide patients with the most accurate costs possible
- Use a multichannel communication strategy to engage with patients
- Consider partnering with vendors to augment resources
It looks like price transparency is here to stay. Now’s the time to make sure your hospital implements the necessary processes and technologies to make the transition as smooth as possible.