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Healthcare Consumerism and Cost: Dispelling the Myth of Price Transparency

The world of healthcare costs is confusing and messy for both patients and providers. Many providers don’t fully understand their costs and therefore struggle to meet the increasing pressure for greater price transparency for consumers. With price transparency rules finalized and implementation looming, many providers are racing against the clock to adapt business practices to meet regulations and communicate the implications to consumers. And each organization’s financial health depends on transparency, as uncertainty about costs keeps many patients from seeking care.

Deb Gordon, seasoned healthcare executive and author of the book, “The Health Care Consumer’s Manifesto: How to Get the Most for Your Money,” and Pat Rocap, Director of Cost Management Services at Health Catalyst, examine the relationship between cost and pricing as the path to transparency for consumers. Deb and Pat provide expert analysis and practical advice to help you become a savvier provider and consumer when it comes to healthcare pricing and spending.

- The implications of federal price transparency regulations.
- The connection between healthcare costing and pricing.
- How to start your organization’s journey to understand costs and why it matters.
- Why price transparency is important to both patients and providers.

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Healthcare Consumerism and Cost: Dispelling the Myth of Price Transparency

  1. 1. © 2021 Health Catalyst © 2021 Health Catalyst February 24, 2021 Deb Gordon and Pat Rocap Healthcare Consumerism and Cost: Dispelling the Myth of Price Transparency
  2. 2. Agenda Price Transparency Through a Consumer Lens • What consumers mean by price transparency • The cost of confusion The Missing Link: Prices and Costs Why Transparency Matters to Providers • Consumer expectations • Federal price transparency regulations How to Start Your Transparency Journey 2
  3. 3. 1. What kind of organization do you work for? • Hospital – 15.12% • Group practice – 4.65% • Health center/clinic – 4.65% • Health plan – 6.98% • Other – 68.6% 2. What is your role? • Administrator – 16.16% • Physician – 2.02% • Nurse or other clinician – 10.1% • Billing/finance staff –9.09% • Other – 62.63% POLL QUESTIONS: Tell us about yourself! 3
  4. 4. Healthcare in the Headlines 4
  5. 5. Google US Healthcare is: • Broken • Expensive • Bad • The Best • Not a Free Market • Good Healthcare is COMPLEX US Healthcare IS….? 5
  6. 6. Price Transparency Through a Consumer Lens
  7. 7. What Consumers Mean by Price Transparency • Simple • Clear • Actionable • Relevant • Timely 7
  8. 8. How Consumers Often Feel Shopping for Healthcare "warehouse dump" by parkydoodles is licensed under CC BY-NC-SA 2.0 • Confused • Overwhelmed • Anxious 8
  9. 9. Sources: The Harris Poll, December 1, 2020; Kaiser Family Foundation, February 28, 2020; JAMA Network Open, November 16, 2018 The Cost of Confusion Uncertainty Anxiety Avoidance 68% of Americans have gotten a surprise bill 2 out of 3 Americans worry about unexpected medical bills Confusion about costs and coverage leads people to avoid care altogether 9
  10. 10. Source: The Health Care Consumer’s Manifesto “I am just concerned that I’m going to go to the doctor and I’m going to have to pay a lot.” --Bella Confusion and Fear of Costs Leads to Care Avoidance 10
  11. 11. 3. Have you ever tried to find the cost of a healthcare service before getting care? • Yes – 73.04% • No – 26.96% 4. If yes, did you find what you were looking for? • Yes – 21.05% • No – 78.95% 5. Have you ever compared prices across healthcare providers? • Yes – 49.5% • No – 50.5% POLL QUESTIONS: Who has tried to find cost information? 11
  12. 12. Sources: Public Agenda. “Still Searching: How People Use Health Care Price Information in the United States.” April 6, 2017; Health Affairs, August 2017 According to Public Agenda “Still Searching” report: • 50% of Americans have tried to find cost information before getting care • 28% have tried to find out the costs of care at one provider • 20% have compared prices across providers before getting care • Consumers are looking to healthcare providers for cost information: • 46% look to their doctor, 45% to the office staff, and 31% to the hospital In a survey published in Health Affairs: • 52% of patients were aware of cost before they got care • 13% searched for the price, 10% compared prices across providers Consumers Want Price Information…From Their Healthcare Providers 12
  13. 13. Source: The Health Care Consumer’s Manifesto “I can’t think of another situation where you would sign up for a major purchase without knowing [the price].” --Art Consumers Expect Price Transparency 13
  14. 14. Why Price Transparency Matters to Providers
  15. 15. Complexity • So many services, codes, negotiated rates Competitive concerns • Disclosing proprietary terms Anti-competitive concerns • Economists fear transparency could lead to tacit collusion, price fixing Sensitivity • A Tylenol costs what?!? Price Transparency is a Challenge…and Sensitive 15
  16. 16. Source: Kaiser Family Foundation, 2020 Employer Health Benefits Survey, October 8, 2020 Consumer expectations are rising as they pay a bigger share of total healthcare costs • Consumers pay more out-of-pocket than ever before • 83% of workers have a deductible, averaging $1,600+ ($2,000+ for 26% of workers) • In 2010, only 70% had deductibles, averaging $917 • 65% of workers have coinsurance for hospital admissions, averaging 20% Innovation will influence transparency • Price transparency tools from private companies, payers, states Regulations are forcing transparency • No Surprises Act of 2020 holds consumers harmless from unanticipated out-of- network medical bills • Hospital price transparency regulations Price Transparency Is No Longer Optional 16
  17. 17. Starting 1/1/2021, each hospital operating in the U.S. will be required to provide clear, accessible pricing information online about the items and services they provide in two ways: 1. As a comprehensive, machine-readable file with all items and services 2. In a display of shoppable services in a consumer-friendly format This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital. CMS Summary Hospital Price Transparency 17
  18. 18. Machine-Readable File Single machine-readable, digital file containing: 1. Gross charges 2. Discounted cash prices 3. Payer-specific negotiated charges 4. De-identified minimum and maximum negotiated charges Consumer-Friendly Display of Shoppable Services, unless a Price Estimator Tool is available. Display of at least 300 “Shoppable Services” that a health care consumer can schedule in advance. (70 of which is CMS defined) Must contain plain language descriptions of services and group them with ancillary services, proving the: 1. Discounted cash prices 2. Payer-specific negotiated charges 3. De-identified minimum and maximum negotiated charges Hospital Standard Charges MUST be Posted in Two Ways 18
  19. 19. Service is for the Inpatient Services at the Hospital • Does not include any pre or post services. • Post may include stay at SNF, Physical Therapy, Drugs. Professional Services, Physician Components • Does this only include the Surgeon? • What about the Anesthesiologist, the Radiologist, the Pathologist? Example of Price Estimator – MSDRG 470 19
  20. 20. The Missing Link: Price and Costs
  21. 21. Consumer Cost • Amount of the Healthcare Provider charges (or prices) that the patient will be responsible for. Hospital Cost • All the expenditures (cost) of providing the services to the patient. The Provider then constructs the charges (or prices) to cover the cost of providing service. The Price-Cost Disconnect 21
  22. 22. In the U.S., a Hospital Chargemaster, or charge description master (CDM) is simply defined as a comprehensive list of items billable to a patient/insurance provider. Reality, much more complicated, alignment with various regulations – CPT/HCPCS coding, ICD-10- CM, ICD-10-PC, etc. and Cost of the Service HOSPITAL REIMBURSEMENT is tied to this coding structure The Hospital Chargemaster 22
  23. 23. 6. Do you believe most healthcare providers understand their own operating cost at a procedure/test level to construct a Chargemaster in accordance with billing regulations? • Yes – 12.5% • No – 87.5% 7. How confident are YOU that you understand your own organization’s costs? • Extremely confident – 10.11% • Somewhat confident – 38.2% • Not confident – 51.69% POLL QUESTION: How Well Do Providers Understand Their Costs? 23
  24. 24. How to Start Your Transparency Journey
  25. 25. Innovation • Enhancements in clinical care • Birth of electronic health records • Electronic Data Warehouse, Data Data Data, and leveraging that data for insight Regulation • Changes in Medicare reimbursement, 1980s regulations shifting hospitals from cost based to a prospective system (DRGs) • Stark Laws • Health Insurance Portability and Accountability Act • Patient Protection and Affordable Care Act (Massachusetts Healthcare Reform) Macro Trends • Aging population • Cost pressures • Global public health concerns Historical Changes Affecting Hospitals 25
  26. 26. Traditional costing is a SILO system of Departmental Cost to Charge Ratios or Relative Value Unit General Ledger Electronic Medical Record Do Hospitals Understand Their Own COST? 26
  27. 27. Advance costing breaks the SILOS system, utilizes patient activity and department cost to develop TRUE costing General Ledger Electronic Medical Record Do Hospitals Understand Their Own COST? 27
  28. 28. Understanding of true cost Identification of best practices Remove variation means removing waste Better charge alignment/ transparency Market positioning Improved risk management/ Population Health Benefits of Understanding of True Cost of Services 28
  29. 29. Would you like to be entered to win one of five copies of Deb Gordon’s book, The Health Care Consumer’s Manifesto: How to Get the Most for Your Money? • Yes • No POLL QUESTION #8 29
  30. 30. Would you like to learn more about Health Catalyst’s products and services? • Yes • No POLL QUESTION #9 30
  31. 31. Questions? Deb Gordon, Author, The Health Care Consumer’s Manifesto: How to Get the Most for Your Money Pat Rocap, Director, Cost Management Services, Health Catalyst