Monday, 10 August 2015 03:31

Price Transparency – Front and Center

Written by

As the healthcare industry moves towards value-based payments, one of the key issues that need to be addressed is the issue of transparency. This includes transparency in both price and quality. I’ve spoken recently on Talk Ten Tuesdays about this topic and the public demand for timely, accurate information on hospital and physician prices and quality. One of the leaders in our industry, the Healthcare Financial Management Association (HFMA), recently assembled a task force to address this issue. The task force was composed of industry leaders from the provider community, hospitals and physicians, several hospital association leaders, consumer groups, and, of course, HFMA. As a past chairman of the HFMA, I know that the Association believes strongly in this issue and the need for transparency in our industry.

Why is price transparency needed now? While in the past, pricing primarily mattered to patients without insurance, with the recent significant changes in insurance plan design and employer-sponsored plans increasing, the employee cost-sharing amounts have risen significantly – so there has been an exponential growth in the need for this information.

The results of the task force’s work are based on the guiding principles below and include the following recommendations:

First, the guiding principles:

Price transparency should empower patients and other care purchasers to make meaningful price comparisons prior to receiving care. It also should enable other care purchasers and referring clinicians to identify providers that offer the level of value sought by the care purchaser or the clinic.

Any form of price transparency should be easy to use and easy to communicate to stakeholders.

Price transparency information should be paired with other information that defines the value of services for the care purchaser.

Price transparency ultimately should provide patients with the information they need to understand the total price of their care and what is included in that price.

Price transparency will require the commitment and active participation of all stakeholders.

Recommendation No. 1: Because health plans in most instances will have the most accurate data on prices for their members, they should serve as the principal source of price information for their members.

Recommendation No. 2: Health plans and other suppliers of price information should innovate with different frameworks for communicating price information to insured patients.

Recommendation No. 3: Transparency tools for insured patients should include some essential elements of price information, to include the total estimated price of the service, the network status of the providers, the out-of-pocket responsibility, and other relevant information such as clinical outcomes and patient satisfaction scores.

Recommendation No. 4: Insured patients should be alerted to the need to seek price information from out-of-network providers.

Recommendation No. 5: To ensure valid comparisons of provider price information, health plans and other suppliers of such information should make transparent the specific services that are included in the price estimate.

Recommendation No. 6: The provider should be the principal source of price information for uninsured patients and patients who are seeking care from the provider on an out-of-network basis.

Recommendation No. 7: Providers should develop price transparency frameworks for uninsured patients and patients receiving care out of network that reflect several basic considerations. 

Recommendation No. 8: Transparency tools for beneficiaries in Medicare health plans or Medicaid managed care programs should follow the recommendations for patients with private or employer-sponsored coverage, as detailed in Recommendation No. 3. 

Recommendation No. 9: The Centers for Medicare & Medicaid Services (CMS) and state administrators of Medicaid programs should develop user-friendly price transparency tools for traditional Medicare and Medicaid beneficiaries.

Recommendation No. 10: To supplement information provided by CMS and state administrators of Medicaid programs, providers should offer information on out-of-pocket payment responsibilities to traditional Medicare and Medicaid beneficiaries upon a beneficiary’s request.

Recommendation No. 11: Fully insured employers should continue to use and expand transparency tools that assist their employees in identifying higher-value providers.

Recommendation No. 12: Self-funded employers and third-party administrators (TPAs) should work to identify data that will help them shape benefit design, promote understanding of healthcare spending, and provide transparency tools to employees.

Recommendation No. 13: Referring clinicians should help patients make informed decisions about treatment plans that best fit the patient’s individual situation. They also should recognize the needs of price-sensitive patients and seek to identify providers that offer the best price at the patient’s desired level of quality.

As all of us in the industry know, hospital and physician pricing is different that pricing for other consumer goods and services. Current prices are impacted by costs, levels of uncompensated care, and reimbursement shortfalls from Medicare and Medicaid, to name a few factors. However, regardless of the complexity of price development, it is our responsibility, as an industry, to be more transparent on price information and to help our patients understand their financial responsibility BEFORE they need our services.

About the Author

Greg Adams is the chief strategy officer for Panacea Healthcare Solutions and has over 35 years of experience in the field of healthcare, including 20 years of experience as a hospital CFO. His experience includes financial operations, managed care contracting, physician practice management, patient accounting, patient access, health information management, materials management, and real estate development. Greg is the past chairman of the HFMA, having served as the chair of its Board of Directors in 2011-12. In that role he oversaw the services the organization provides to its 40,000 members. Greg speaks extensively on healthcare reform and the transition to a value-based payment system. His speaking engagements include national, regional, and state programs. He has previously served as a member of the National Board of Directors for the Healthcare Financial Management Association from 2002-2005 and as president of the New Jersey chapter in 1997-98. He has also served as a member of the Board of Trustees and chairman of the Finance Committee at St. Ann’s Home for the Aged in Jersey City, N.J.

Contact the Author

This email address is being protected from spambots. You need JavaScript enabled to view it.

Comment on This Article

This email address is being protected from spambots. You need JavaScript enabled to view it.

Greg Adams is the Chief Strategy Officer for Panacea Healthcare Solutions and has over 35 years of experience in the field of healthcare including 20 years experience as a hospital CFO. His experience includes financial operations, managed care contracting, physician practice management, patient accounting, patient access, health information management, materials management and real estate development.  Greg is the Past Chair of the National HFMA, having served as the Chair of its Board of Directors in 2011-12. In that role he oversaw the services the organization provides to its 40,000 members. Greg speaks extensively on healthcare reform and the transition to a value based payment system. His speaking engagements include national, regional, and state programs. He has previously served as a member of the National Board of Directors for the Healthcare Financial Management Association from 2002-2005 and as President of the New Jersey chapter in 1997-98. He has also served as a member of the Board of Trustees and Chairman of the Finance Committee at St. Ann’s Home for the Aged, Jersey City, New Jersey.