CMS Price Transparency is Coming: 5 Tips to Prepare
Ready or not, price transparency is coming.
On Jan 1, 2021, the much-anticipated hospital price transparency rules from the Centers for Medicare & Medicaid Services (CMS) go into effect.
Finalized in November 2019, these rules require hospitals to publicize their list of standard charges for items and services ranging from supplies and room and board to facility fees and physician services. CMS rules also require hospitals to publicize charges in a machine-readable format as well as a list of shoppable services that’s written in plain language.
While the price transparency rule has obvious short-term implications for hospitals around the country, it also presents long-term opportunities to better meet the needs of patients as consumers. Here are five things your hospital should be doing to prepare for the CMS price transparency deadline.
Examine Your Managed Care Contracts
CMS requires hospitals to list five types of standard charges: Gross, the discounted cash price, negotiated prices with specific payers, and the de-identified minimum and maximum negotiated charges. To obtain much of this information, you’ll need to understand the specific terms of your hospital’s managed care contracts. You may find it valuable to develop a matrix of key contract terms, match this matrix to revenue and usage figures, and identify any clear gaps.
Assess Your Progress Toward Compliance
Once you examine your managed care contracts, you’ll have a sense of how much effort will be required to meet the price transparency requirements. Key questions to ask include but are not limited to the following:
- Do we have adequate resources available internally?
- If we lack internal expertise, do we need a professional services firm?
- How do the price transparency requirements align with our hospital’s digital transformation strategy?
Don’t take the requirements lightly. If hospitals fail to comply, CMS requires them to create a corrective action plan. If hospitals don’t create a plan, they face fines of up to $300 per day. With healthcare margins tight, those fines can have an impact.
Define Your Shoppable Services
The final rule requires hospitals to list prices for at least 300 shoppable services, which are defined as services or procedures that a patient can schedule in advance. CMS requires 70 specific services, which are listed in the final rule (PDF), and hospitals are required to select at least 230 more. The criteria for hospital-selected services are open; organization can select those with high utilization rates, those that competitors don’t offer, those that provide a high margin, or (most likely) a combination of the three. In addition, hospitals must list ancillary services that are commonly provided with primary services; a claims analysis will help your organization determine this.
Prepare and Publish Standard Charge Files
Properly posting charge files requires collaboration across the enterprise. Compliance and legal will need to review the format, while IT, web design, and marketing should provide input on how best to display information to website visitors.
Note that CMS has provided templated layouts and specified a required naming convention for machine-readable files; be sure to use these. There’s more flexibility for the shoppable services. For example, hospitals can use a Web-based price estimator tool, which provides consumers an easy-to-use resource when compared to a complex data file.
Refine Your Digital Health Strategy
Don’t view the process of creating a consumer-friendly list of shoppable services as an isolated event. Price transparency is part of a larger movement within healthcare to create a better overall digital patient experience. Hospitals must be ready to meet the expectations of patients as consumers of healthcare services who increasingly expect seamless engagements with hospitals – from scheduling appointments to paying bills to seeing physicians in virtual care visits.
As the CMS price transparency deadline approaches, contact Healthcare IT Leaders if you require assistance to assess your progress toward compliance, effectively manage your project, implement price estimation tools, or develop a long-term digital innovation strategy. Our consulting team is ready to help your hospital meet its needs.
Colin Batherson is Associate Director, Revenue Cycle Operations for Healthcare IT Leaders. As an RCM transformation consultant, Colin has led comprehensive payment reviews for several large hospital systems, while advising on the development and implementation of centralized billing and revenue cycle analytic programs.