Hospital price transparency: Are you ready for 1 January 2021?
With a deadline looming, here’s what hospitals can do to help avoid fines and maximize their chances for success
It’s been quite a year for US hospitals. After spending the better part of the spring and summer consumed with crisis response efforts, they are now faced with balancing the demands of COVID-19 with providing traditional healthcare services. Amidst all of this, the hospital price transparency rule was upheld in June, with the deadline for compliance now rapidly approaching. Hospital leaders must ensure they have a plan in place to meet the regulations and continue to provide the best services and experiences for patients.
What hospitals must do – and what happens if they don’t
Under the final rule, the Centers for Medicare & Medicaid Services (CMS) is requiring each US hospital to publish clear, accessible pricing information for 300 “shoppable” services no later than 1 January 2021. This information must be published online, require no logins or personal health information (PHI) for access, and be offered in a consumer-friendly format. They must also publish a machine-readable file of all their rates for all services, not just the shoppable services.
Failure to comply with the above requirements will come with a cost of USD 300 dollars per day.
Hospitals can comply with the rule and help improve their chances of success by ensuring they have the right price estimation tool in place before the January deadline, as well as applying market-specific data to guide pricing and offering strategies.
Selecting the right price estimation tool
Choosing the right price estimation tool is a critical piece of the puzzle. Even if your hospital already has a price estimation tool in place, reviewing the following recommendations can help determine whether your tool has what it takes to help put your hospital in the position to succeed under the new rule:
- Consider creating a consumer-facing format that is built from a machine-readable file. This will allow key stakeholders to easily update rates as necessary, while giving your hospital control over which services are publicly displayed to consumers.
- Ensure your tool includes the ability to search for services, descriptions, payers and billing codes. You’ll need to include standard ancillary services with shoppable service prices. There are tools that incorporate grouping algorithms into their pricing methodologies, offering more accurate estimates to consumers – and, ultimately, a better patient experience – potentially adding to your competitive edge.
- Adopt a platform that is easily accessible from the hospital’s website. Cloud-based tools can store, manage and publish pricing data to meet the rule’s requirements – while eliminating the need for extra staff resources and reducing the probability of error.
Politics, payers and the future of price transparency
With the outcome of the presidential election pending, some may believe that a potential administration change could result in a repeal of the hospital price transparency rule. However, waiting until after the election will not provide hospitals with adequate time to meet the current requirements, should the rule remain place. Additionally, the push for better transparency into healthcare costs is not just a federal concern but being pursued by individual states as well. That’s why I strongly recommend that hospitals proceed with taking the necessary steps to have their machine-readable file and consumer-facing tool in place no later than the end of the year.
What does this all mean for the healthcare industry after 1 January 2021? I anticipate that hospital price transparency will have a huge impact on payer negotiations with providers during the coming year. For the first time, payers and hospitals will have access to specific negotiated rates from all providers in their markets – so higher prices will need to be justified using differentiators, such as better quality and outcomes. Additionally, hospitals will need to be prepared to explain these differences to their consumers in a way that’s understandable and actionable.
How IBM Watson Health can help you succeed
In addition to helping your hospital implement an enhanced price estimator tool, IBM® Watson Health® can help you meet requirements and navigate the changes in market dynamics that may result from the new rule. Here’s how we can help:
- Meet minimum requirements
Don’t know where to begin? IBM Watson Health can help your hospital with preparing the machine-readable file and consumer-friendly format necessary to meet the basic requirements by 1 January 2021.
- Develop your “hospital playbook”
Watson Health consulting services can provide your facility with a “hospital playbook” that leverages local and federal reimbursement benchmarks so you can see how your rates compare within a market, to surrounding markets, and as a percentage of Medicare rates. You can also receive strategic recommendations on which shoppable services your hospital should publicly display, as well as where you may have pricing opportunities or threats.
- Model revenue impacts
The same reimbursement benchmarks used for the “hospital playbook,” along with demographics and demand estimates, can be used to help hospitals understand their market reimbursement rates by shoppable services and the potential revenue impacts of various market shifts due to price transparency.
- Develop a payer and consumer engagement strategy
Patients, especially those in high-deductible health plans, are becoming savvier about their healthcare choices. Hospitals and health systems that make it easier to view pricing and quality information and schedule appointments will be more likely to secure patient loyalty and grow revenue in the future. As such, Watson Health aims to offer additional services to continue to help improve the consumer experience beyond the 1 January 2021 deadline.
While many hospitals must continue to focus their energies on staying afloat in the near-term, they should not ignore the implications that this new hospital price transparency rule will have well into the future. With the window for compliance rapidly closing, hospital leaders should be thinking not only about how to meet this new requirement, but whether simply being compliant will be enough.