Preparing for price transparency requirements and patient demands

Ogi C. Kwon, JD, MHA

Manager, Regulatory Compliance (Acute Care) of R1 RCM.

,
Kathryn S. Beard, JD

Manager, Regulatory Compliance (Physician), R1 RCM

Stay ahead of regulators, proactively address growing consumerism demands, and provide patients with price transparency before it is required.

The most successful physician groups anticipate trends and incorporate necessary changes into their practice culture. From protecting patient data to ensuring compliant billing, practices that understand regulatory requirements and proactively create an environment that fosters compliance enjoy greater patient satisfaction and decreased government scrutiny. The same holds true for practices that understand price transparency. While many physician practices are embracing a consumer-driven approach, others may be left behind. Evolving to stay competitive by keeping pace with consumerism and price transparency demands will be critical.

The policy goal of illuminating healthcare costs so patients may better assess treatment options seems worthwhile, but there is much uncertainty about what price transparency will ultimately look like. This is especially true for physician practices, which have taken a back seat due to the industry’s focus on hospitals. Current regulations include pricing disclosure requirements that are not uniform for hospitals and providers, while price transparency has ongoing unresolved legal challenges.1 In this environment, some practices may consider adopting a “wait-and-see” approach. However, the best strategy is to stay ahead of regulators, proactively address growing consumerism demands, and provide patients with price transparency before it is required.

How federal price transparency requirements impact physician practices

Beginning January 1, 2021, the Centers for Medicare & Medicaid Services (CMS) will require hospitals to post a comprehensive list of their “standard charges” –including privately negotiated rates with insurers–for items and services, as well as a separate list of “shoppable services” in a consumer-friendly format.[2] Along with their own rates, hospitals must also disclose negotiated rates for services provided by their employed physicians.[3] Importantly, however, hospital-employed physicians do not need to publish this information online – rather, hospitals must include it as part of their standard charges. Hospital-employed physician groups should collaborate with health system leadership to ensure their charges are accurately posted. Health insurers will be required to provide out-of-pocket costs and negotiated rate information for covered medical services, but they do not have to make cost-sharing information available until 2023.[4]

While price transparency requirements for hospitals and insurers are outlined in federal regulations, the applicability to independent physician practices is less clear. Price transparency is arguably important regardless of a physician’s employment arrangement, but CMS has explicitly stated that it lacks the authority to require non-employed physicians to disclose rate information.[5] This lack of impending federal requirements may be a short-term source of relief for independent practices—but to stay competitive, any strategic provider will heed patient demand for price transparency and formulate an approach.

How physician practices can deploy a successful price transparency program

Even without a federal mandate, physician practices that provide relevant, easily understood and readily accessible pricing information can reap multiple benefits. By giving patients a streamlined experience, both independent and hospital-employed physician practices can differentiate themselves from competitors, improve patient satisfaction and grow market share.

Three integral components of transparent pricing programs include:

  • Knowledge of state laws – Some states have implemented price transparency requirements that are distinct from CMS’s requirements.6 For example, Indiana requires Ambulatory Surgical Centers (ASCs), including physician-owned ASCs, to provide pricing information to patients.7 Alaska requires physicians to make an annual list of their 10 most commonly performed services available at their reception area and online if they have a practice website.8 A number of states require physicians and other providers to give patients cost estimates on request,9 though more sophisticated practices make this information easily available to all patients. Physician practices should consult with legal counsel to determine whether any state-specific price transparency requirements are applicable to their practices.
  • Use technology to anticipate patient demands – After hospital price transparency requirements take effect in 2021, patients may become increasingly curious about their physician practices’ costs for common services. Certain patients, such as those who pay cash for services or have high-deductible health plans, may be particularly sensitive to costs of care. Practices utilizing patient-friendly technology to drive accurate out-of-pocket cost estimates can improve patient satisfaction. Additionally, offering patients particularized estimates prior to time of service—rather than simply providing information on a pre-made list or negotiated charges—helps patients make cost-conscious decisions about their care and improves their experience. Being upfront about cost can also facilitate better collections by helping patients financially prepare in advance of their visit. By leveraging patient experience technology to foster price transparency, practices can empower patients to use consumer-friendly options such as automated payment plans and other flexible arrangements. These options can help accelerate and increase revenue from patient payments.
  • Create a culture of transparency – To maximize the effectiveness of a price transparency program, practices should engage in training and education activities for all clinicians and staff – particularly key stakeholders such as physicians, the revenue cycle team and front desk staff. These stakeholders’ understanding and buy-in for any changes in policies, processes and technology will ensure long-term success. By developing a program now, practices that are early adopters of price transparency will also be better equipped to address future regulatory requirements.

The future of price transparency

Ongoing litigation over price transparency makes predicting the future difficult, but a growing number of state and federal regulators require providers to furnish cost estimates for patients. It will likely become the industry standard to give patients cost estimates, including their cost-sharing responsibility, before they receive services. Ultimately, physicians who champion price transparency initiatives will reap the rewards of greater patient satisfaction and may see improvements in timely collections. The optimal price transparency program requires regulatory knowledge, best practice processes and the right consumer-friendly technology. Make sure you have a revenue cycle partner that can deliver in all three areas so your practice is set up for success – both now and as price transparency demands evolve.

Disclaimer: This article represents the views of the authors and does not necessarily represent the views of R1 RCM or its customers. Information contained in this article is for informational purposes and is not intended to constitute legal advice.

1 American Hospital Association v. Azar, No. 20-5193

2 45 CFR 180.50, 180.60.

3 45 CFR 180.20 (defining “items and services” to include “services of employed physicians and non-physician practitioners (generally reflected as professional charges)”)

4 Internal Revenue Serv., Employee Benefits Security Admin., and Centers for Medicare & Medicaid Servs., Final Rule, 85 Fed. Reg. 72,158 (Nov. 12, 2020), to be codified at 45 CFR 147.210.

5 See 84 Fed. Reg. 65524 at 65534 (“because physicians and nonphysician practitioners who are not employed by the hospital are practicing independently, establish their own charges for services, and receive the payment for their services, we indicated we did not believe their charges for their services would fall within the scope of section 2718(e) of the PHS Act as they are not services ‘provided by the hospital’”).

6 Indiana’s House Enrolled Act 1004 requires Ambulatory Surgical Centers to provide certain pricing information to patients beginning March 31, 2021

7 Indiana Code § 16-21-17-1

8 Alaska Stat. 18.23.400.

9 E.g., Alaska requires providers to give nonemergency patients a good-faith estimate within 10 days of request, Alaska Stat. 18.23.400(g); Massachusetts gives providers two days to respond to patient requests by disclosing the allowed amount or charge of the admission, procedure or service, including the amount for any facility fees required, Mass. Gen. L. c.111, §228.