Transparent Is the New Black

With one move, CMS declared price transparency as the new black: CMS rang in the new year with a ruling that mandates that hospitals provide patients with a current set of standard charges for all services they offer. This move provides patients with a digitally accessible menu of fees and prices for medical procedures and services. One factor that drove the CMS announcement was upset patients on the hook for paying cryptic medical bills with limited understanding of the reasoning behind each charge.

While on the surface transparency is great, it poses immense challenges for healthcare providers and payers. Patients find it unfair and frustrating that they do not have a chance to review the medical billing menu. They simply want to know what they are paying for, as we all do in pretty much every transaction we make in everyday life. This illustrates the level of disconnect between healthcare providers and health plans that pride themselves on their customer engagement or patient satisfaction initiatives, and patients who view medical bills as the bane of their existence and do not feel much satisfaction from that experience. If other industries can do it, healthcare must find a way to do it as well. Otherwise, patient satisfaction and member engagement efforts will just be more hot-air initiatives until the next flavor-of-the-month buzzword hits.

So how will transparency impact the patient, the provider, and the payer? Price transparency will bring a breath of fresh air for consumers of health services and, to a certain extent, for providers that can absolve their billing office from explaining medical charges to individual patients daily. However, the new mandate may create headaches for health insurers whose revenue model tends to rely on the opaque and complex negotiations that surround the pricing structures with each hospital or health system based on the numerous health plans and policies they offer, which, by the way, can change from year to year. The bottom line is that all the talk around customer engagement or patient satisfaction is moot unless the patients’ experience is similar to an Amazon shopping experience, in which the customer can have an at-a-glance view of the services they are going to receive, a breakdown of associated fees, comparison pricing from other providers by zip code, or other criteria such as provider rankings and their status as in-network or out-of-network providers.

If price transparency was easy, it would have already happened, and it wouldn’t be worth writing about. Let’s look at several reasons why price transparency is difficult and why these issues need to be prioritized to improve the patient experience:

  • Heavy data lifting: Obtaining pricing information from multiple providers, clinics, laboratories, and multiple health plans and policies requires a great deal of heavy lifting. It requires lots of number crunching, data compiling, scrubbing, and cleaning in a way that is consistent, searchable, comparable, and analyzable—by the average person, no less. But wait, there’s more! Funds that patients hold in their health benefit accounts—whether they have a health savings account, flexible spending account, or health reimbursement account—are also important to bring into the mix.
  • The difficulty of simplicity: Demystifying ICD-10 codes and chargemaster prices for end users is a tall order. Now that the U.S. has moved from ICD-9 to ICD-10 to improve clinical accuracy (thanks to over 70,000 medical codes), it is unlikely that we’ll go back to simplifying that menu. Nevertheless, simplicity must be key here.
  • Value meals versus a-la-carte pricing: Each patient is unique, so even if two patients have a similar medical condition or illness, they may receive a different set of tests or services. And even if they receive the same set of tests or services, they may be charged a different fee based on which hospital they go to. This may be evident to the physician or case manager, but it makes no sense to the patient. So beyond a line-by-line report of everything from the price of a bandage to the cost of a heart-lung transplant, patients would benefit from a “value meal” type of packaged pricing to illustrate sample treatment fees to supplement the a-la-carte price menu.
  • Communication is key: Getting this dense set of information into the hands—and minds—of all users is another major task. A herculean team effort in the form of a clearinghouse or consortium between health plans, health benefit brokers, employers, and healthcare providers is a reasonable first step. Customer advocacy, customer support lines, and individual support must follow in its heels and be readily available to patients.

These issues carry a heavy weight and present challenges to the industry. It rattles the current pricing and distribution channels and disappoints those that have dedicated honest efforts into their patient engagement processes. But, and there’s always a but, all that talk of customer engagement and patient satisfaction without the transparency piece is ultimately considered a half-baked idea, if not an empty promise, by the end user.

Tackling these issues must be a priority for those that earn a living by touching anything that ends up on a patient’s bill—whether it be the pricing, coding, claims, adjudication, health benefit account, billing, or payments component. Health industry payers, providers, and billers are all on the hook to shoulder some of that heavy data lifting by simplifying and demystifying medical bills for those who ultimately pay that bill and, in exchange, allow the industry to make a living. After all, the customer is always right.

CMS’ Seema Verma agrees. Read her thoughts here.

Price transparency is the new black, and it is unlikely to go out of fashion anytime soon.

How can we help?

If you have a question specific to your industry, talk with an Aite Group analyst.  Call us today to learn about the benefits of becoming a client.

Talk to an Analyst

Receive email updates relevant to you.  Subscribe to entire practices or to selected topics within

Get Email Updates