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While insurance companies and employers are deploying more pricing tools, healthcare providers are in a unique position to lead the price transparency revolution.
With ICD-10 in the rear view mirror, providers now face a new challenge-answering the public and media call for consumer price transparency. High-deductible plans now cover nearly a quarter of Americans with commercial insurance, raising the ante on patient financial responsibility.
DeadyYet large numbers of patients remain confused about how much they will owe for hospital services-a full 36%, according to a 2015 HRI consumer survey. This problem, unheard of in other consumer industries, not only endangers patient satisfaction scores but threatens to increase the bad debt load of organizations already struggling with severely low margins.
While insurance companies and employers have deployed some pricing tools, they have done a poor job of accurately representing multiple providers’ fees within a geographic area.
New technologies, however, can help providers take the price transparency bull by the horns. These technologies can also transcend mere compliance with a state’s price transparency laws.
Posting a list of charges on a provider’s website may satisfy the letter of the law but it fails to give consumers an accurate picture of what they will owe for services. Knowing this, providers have struggled to come up with an alternative that does not reveal proprietary information to their competitors. As a result, many refer questions to patients’ insurance companies.
How providers can take the reins
Healthcare consumers want an accurate understanding of what they will owe for services before they are rendered. The operative word here is “accurate,” as in, an estimate based on the consumer’s current levels of insurance coverage. Or, in the case of a self-pay patient, an estimate based on the provider’s discounted fees for consumers that pay fully out-of-pocket.
Either way, with self-service pricing, healthcare consumers generate the estimates themselves, typically from an online calculator on the provider’s website. The process is quick and hassle-free; a consumer inputs his or her name, insurance plan number and perhaps two or three more data elements. Within 10 to 45 seconds, a complete and accurate estimate appears, giving consumers immediate, line-item insight into what they will owe.
The process is powered by rules-based engines that automatically query, retrieve and combine data from payer portals with the hospital’s charge master data and payer contracts. Analytics plays a critical role in ensuring the estimate is accurate, including analysis of previously adjudicated claims to identify variances.
This tool solves one of the most persistent challenges with implementing price transparency: the pitfalls of making proprietary financial information public. As a provider-facing solution, and because patient-unique information does need to be entered to generate an estimate, not just anyone can use the calculators.
This is vastly preferable to putting a list of total charges or paid amounts out there for all competitors to see, which neither reflects negotiated rates with payers or the patient’s accurate out-of-pocket costs.
At the same time, self-service price calculators appeal to today’s information-driven patients and nicely align with how they already seek pricing on other purchases, from airfare to mortgages.
Good for patients, good for business
One of the most promising advantages of a self-service price calculator is its potential to engage consumers in multiple ways. After generating a price estimate, for example, the calculator could prompt high-deductible and self-pay consumers to view payment plan options. It could even engage those patients with concerns about their ability to pay and schedule time with a financial counselor. Realistically, we can only expect price concerns to grow-right along with the increasing number of high deductible health plans.
That said, a deductible payment and co-insurance spread out over a year, or whatever the time span the provider and patient agree on, is more manageable than a lump sum payment. Armed with clear, accurate information about how much they will pay-and how-healthcare consumers can better plan for paying their medical bills. This in turn will help reduce a hospital’s bad debt or charity write-offs.
Most important, patients who clearly understand their financial responsibility are more likely to schedule rather than delay urgently needed care. This reason, above all others, is why providers would be wise to take control of the price transparency issue now, with a solution that’s easy for patients to use, and makes it easier for them to financially manage their care.
Jay Deady, CEO of Recondo, has worked to improve the healthcare revenue cycle for more than 25 years.