Healthcare Price Transparency: Three Opportunities for Transformation

With health systems, payers, andCMScontributing to the complex process of setting and understanding medical pricing, healthcare price transparency has been an ongoing challenge for healthcare organizations. However, as of January 1, 2021, health systems must publicly provide price transparency information or face steep consequences. Failing to adhere to the new legislation can result in publicized penalties, corrective action plans, and monetary punishments.

Although the current price transparency legislation is subject to change based on new political influences, healthcare organizations should still prioritize price transparency because it empowers patients throughout the care process and increases the trust a patient places in a health system. Better transparency means patients are empowered because they are more informed about price and quality of care and will most likely adopt a consumer-driven approach to future care decisions. The consumer mentality in healthcare opens the doors for increased competition between health systems, tantamount to organizations losing patients andrevenue如果竞争对手在他们的透明策略中没有考虑消费者驱动的定价方法。

To comply with the new CMS-backedprice transparency legislation, health systems mustprovide standard chargesvia machine-readable files and a consumer-friendly display of shoppable services. Meeting these rigorous healthcare price transparency standards demands that health systems have robust price transparency technology (e.g., theVitalware Hospital Price Index) that can organize and display an organization’schargemaster, list of shoppable services, and a list of all services. Along with the price transparency technology, health systems must develop and communicate adefensible pricing strategy(DPS) to convey the reasoning behind the cost of care.

Healthcare Price Transparency Provides Three Key Opportunities

With the price transparency technology and DPS in place, health systems are not only prepared to meet CMS’s cost requirements, but they can also use price transparency to take advantage of three critical opportunities:

#1: Satisfy Increasing Patient Interest in Cost of Care

As patients become more involved in their care, they become more engaged in understanding the cost of care. In the past, patients often went to the most accessible or recommended provider with little investigation. Now, patients conduct in-depth internet searches to compare different health systems, provider ratings, procedure alternatives, and cost. Just like a consumer shops for the best deal on a car, a patient now shops for the best deal or outcome for some procedures. As healthcare costs continue to rise, patients only grow more curious and committed to learning about their options, becoming highly educated and more in control of their care.

The changingreimbursementlandscape that requires patients to pay more out of pocket for procedures is also piquing pricing curiosity. Paying more for care incentivizes patients to understand what type of care they receive and the associated cost. In short, when patients have to pay, they review and scrutinize every charge on a bill and inquire about the reasoning behind the price.

#2: Earn Patient Trust—A Short- and Long-Term Imperative

Although the new healthcare price transparency legislation requires health systems to share pricing structure, providing patient-friendly information around cost structure is also an opportunity to create and deepen patient trust. Price transparency can increase trust between patients and health systems by helping patients understand what they are paying for.

For example, rather than receiving an explanation of benefits (EOB) after a high-charge procedure, health systems can provide cost information before procedures. With a proactive approach to cost disclosure, health systems give patients time to financially prepare, research payment options, and select the right payment plan. Price transparency also avoids confronting a patient with surprise bills after a procedure, fostering trust between the patient and the health system. For example, when a patient receives a bill from a health system or payer, he might be confused about the amount and why he owes anything. In many instances, the patient has already met his deductible and paid the co-pay, yet he still receives a costly bill that he doesn’t understand and didn’t expect. Explaining the bill before the procedure—and especially before the patient gets the bill—ensures the patient that the health system is doing everything it can to help the patient pay for the procedure and understand the financial ramifications if the patient cannot pay.

Providing thorough information about the pricing model and DPS in simple terms also builds patient trust. For example, if a patient is going to pay for a knee replacement, she wants to understand every subitem (e.g., inpatient charges related to hospital stays and any associated fees) within the total procedure cost. She might shop around to learn more about a health system’s reputation and outcomes and might even be willing to pay more based on higher ratings. If the pricing information is clear and defensible (every line item within the cost makes sense and has an easy-to-understand reason), patients are more likely to trust what the health system charges for care.

When more health systems provide price transparency, patients will know which hospitals charge less money for certain procedures. This insight incentivizes health systems to drive down cost and deliver quality care, another benefit for patients. Additionally, health systems can use price transparency to their advantage by showing patients the fair prices they charge for care compared to market prices, increasing a patient’s willingness to trust the health system.

Organizations also have more incentive to be upfront about cost, and in some cases, offer discounts for cash payment, to avoid situations where patients do not or cannot pay the cost after a procedure. With unpaid bills, health systems have no way to go back and create a financial plan, increasing the chance of incurringbad debt. When patients know the cost before the procedure and have time to select a payment plan, they are more likely to pay their bill.

#3: Create the Optimal Patient Experience

A key component of delivering an excellent patient experience—thereby building a loyal patient base and future referrals—is sharing cost information up front. The patient experience includes how a health system and its team members treat patients when they’re at the hospital and how an organization provides thorough information about the cost of care. Informing patients about procedural costs and payment options is critical in treating patients with the highest quality of care and setting patients up for the best outcomes.

价格透明度使患者在其护理过程中发挥积极作用，使他们能够探索各种选项，选择最适合的卫生系统或提供者，而不是让初级保健提供者的转诊直接到他们接受护理的地方。当患者了解自己在健康和护理计划中的角色时，他们就会与护理团队合作，共同承担责任，而护理团队则专注于为患者提供获得最佳健康状态的每一个机会——这是构建优秀患者体验的基础。

Healthcare Price Transparency Sets Patients and Health Systems Up for Success

Price transparency has been an ongoing conversation as healthcare organizations strive to understand what a patient needs to know to make informed care decisions and the best way to pay for care. With a strong price transparency strategy, health systems can provide every opportunity for patients to find the best care at the lowest cost. By publicly providing cost information, payment options, and sound justification behind procedure prices in advance, health systems comply with the new healthcare price transparency legislation and improve their relationship with their patient populations.

对于一些缺乏技术和定价策略的系统来说，新立法可能是一个障碍。尽管如此，这仍然是一个让患者参与整个护理过程的机会，加深患者的信任，并提供理想的患者体验。有效的价格透明战略为卫生系统和患者的成功奠定了基础，增加了患者未来回到同一机构接受治疗、向家人和朋友推荐服务的可能性，并推动更多业务流向该卫生系统。

Additional Reading

Would you like to learn more about this topic? Here are some articles we suggest:

1. Healthcare Relief Funding: Five Steps to Maximize COVID-19 Dollars
2. Healthcare Revenue Cycle: Five Keys to Financial Sustainability
3. Reduce Bad Debt: Four Tactics to Limit Exposure During COVID-19
4. An Effective Financial Response to COVID-19: Three Ways to Leverage Data
5. Activity-Based Costing in Healthcare During COVID-19: Meeting Four Critical Needs

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