Author: Mel Gunawardena, Managing Partner, SYNERGEN Health
In November 2019, two new rules that require pricing information to be made public were finalized by executive order and announced by the Trump administration. The rules – Calendar Year 2020 Outpatient Prospective Payment System & Ambulatory Surgical Center Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule and the Transparency in Coverage Proposed Rule – reinforce historic steps to increase price transparency to empower patients. Additionally, the administration hopes this recent move will increase competition among all hospitals, group health plans, and health insurance issuers in individual and group markets.
While the Trump administration anticipates that the executive order will reduce costs, hospitals fear this could have the opposite effect and drive prices even higher. This has led to the American Hospital Association, Association of American Medical Colleges, Children’s Hospital Association and Federation of American Hospitals recently announcing their intent to sue the federal government alleging the rule exceeds the CMS’ authority by forcing them to disclose negotiated prices.
The goal in which the executive order hopes to achieve is to enhance the ability of enrollees and patients to make more informed decisions about their care by knowing the costs and quality of health care plans available. With the predominant role that third-party payers and the U.S. government play within the health care system compared to other major and minor purchases made every day, patients have very little insight into prices and cost sharing information. For example, when going out to dinner, prices can easily be seen on menus or signs. Also, many restaurants are required by their state’s health department’s to publicly post A, B or C letter grades to indicate their level of food safety & quality compliance. With this line of thinking, this kind of transparency reduces payment disputes when the bill arrives and allows people to ensure they’re getting quality food.
Although no prices are shown for office visits today, they are often available upon request. As a way to address the practice of surprise billing, the executive order hopes to provide complete transparency to patients in regard to the pricing and quality of every person and institution that is part of a given care plan. This includes surgeons, surgical assistants, labs, hospitals, anesthesiologists, rehab and hospital care personnel, surgical centers, etc.
As seen across industries, the legal challenges of this executive order have left many health care organization’s leaders wondering what’s next and if/when they should prepare for implementation of the regulation. If this becomes law, physicians such as orthopedic groups must carefully consider how this could impact their practice sooner rather than later.
Key questions to weigh are:
- How would your prices compare (take cash pay rates, for example)?
- How would your quality compare?
- Would you do anything differently?
- How would you handle or communicate with your patients?
- Would you add new service lines or technology such as telemedicine or remote monitoring to help improve outcome and quality?
While the final rule on hospital pricing won’t go into effect until Jan. 1, 2021 (if no legal proceeding delay it), taking the time to review and develop necessary processes can assist providers with managing potential risks and aftereffects. Additionally, taking this time to eliminate any procedures/activities that obstruct price transparency can increase mutual engagement between the patient and provider and can improve the current patient financial experience.