Tag Archives: Price Transparency

Lifting the Veil of Secrecy in Health Care Prices

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Lifting the Veil of Secrecy in Health Care Prices

Benjamin Franklin's portrair on a one hundred dollar bill peeks out from underneath a puzzle

Stories that caught our attention this week

The late, great Princeton economist Uwe Reinhardt once said that the system for determining prices in the US health care system was “chaos behind a veil of secrecy.” That was in 2006, and clearly, the chaos persists today: In San Francisco, the price for a basic blood test ranges from $80 to $564; in Los Angeles, $12 to $413; and in Portland, $15 to $44.

Why does the price of one of the most common tests in medicine vary so much? Multiple factors like the bargaining power of insurers, provider consolidation, and underlying economic conditions Essential Coverage may explain some of the differences, but the veil shrouding these striking price discrepancies has yet to be completely lifted.

Margot Sanger-Katz writes in the New York Times that health care prices are still hard to uncover because hospitals and insurers set them behind closed doors, and some claim those prices are legally protected trade secrets. She looked at a new analysis by the Health Care Cost Institute (HCCI) that found “enormous swings in price for identical services are common in health care.” To compile the pricing data, HCCI had to pool de-identified health insurance claims submitted to three large insurance companies. “Even the institute can’t say which insurers and providers are attached to the different prices, and it has eliminated certain markets with less competition where it might be easy to guess,” Sanger-Katz writes.

Price transparency is slowly becoming more prevalent. A few online tools exist that allow the public to estimate the price of some medical procedures. The FAIR Health consumer tool has a five-step process for looking up in-network and out-of-network prices for procedures based on a patient’s location. Healthcare Bluebook has a consumer search tool for price information. And HCCI runs guroo.com, a national and regional-level tool that provides average prices for bundles of health care services.

Government Efforts to Make Prices More Transparent

Federal and state policies are starting to complement these efforts. On January 1, 2019, a new national health care transparency policy took effect. The federal government now requires hospitals to post their price lists, called chargemasters, online in a format that can be easily processed by a computer. Critics of the regulation say that chargemasters are virtually incomprehensible to patients, and Vox journalist Sarah Kliff points out that they only lay out the list prices that hospitals charge for services, not the negotiated prices that insurers actually pay. However, the policy still takes the health care system one step closer to being transparent about costs.

In California, work continues on the creation of a new statewide Healthcare Payments Database. Once completed, the database could provide policymakers, patients, and the public with greater insight into the prices charged for medical services. A review committee comprised of health care stakeholders and experts is advising California’s Office of Statewide Health Planning and Development (OSHPD) about the creation, implementation, and administration of the database. The office has until July 1, 2020, to deliver its recommendations to the legislature.

Several other state-level efforts to increase price transparency have been proposed or remain pending in the current legislative session. Assembly member Al Muratsuchi (D-Torrance) authored AB 1038, a recently stalled measure that would have required California physicians to provide OSHPD with information on the rates they charge the public as well as the different rates they negotiate with health plans for the same services. OSHPD would be required to aggregate the negotiated prices compared to Medicare rates by geographic region. State Senator Richard Pan (D-Sacramento) introduced SB 343, which would update current transparency and disclosure requirements for the health care industry to include data from Kaiser Permanente.

The Prices Are the Problem

Despite the fact that Americans do not use health care services at a greater rate than their counterparts in other advanced nations, such as the United Kingdom, Canada, and Australia, the US spends much more on health care than those countries. Researchers from Harvard University and the London School of Economics published a study in JAMA showing that “prices of labor and goods, including pharmaceuticals, and administrative costs appeared to be the major drivers of the difference in overall cost between the US and other high-income countries.”

In other words, health insurance premiums and out-of-pocket costs are high not because Americans are sicker or go to the hospital too much, but because of soaring individual prices for services.

At a time when Californians are more worried about paying for medical bills than housing, policymakers and patient advocates will need to continue pulling back the veil of secrecy that obscures the true causes of inordinately expensive care.

 

 

 

Americans’ healthcare paradox: ‘angst’ on costs, overconfidence on quality

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https://www.healthcaredive.com/news/americans-healthcare-paradox-angst-on-costs-overconfidence-on-quality/551876/

Dive Brief:

  • More than three in four Americans expect healthcare costs to increase over the next few years and result in “significant and lasting damage” to the U.S. economy, according to a survey by nonprofit West Health and Gallup. And 69% were “not at all” confident policymakers will fix the situation.
  • Given the choice between a 10% increase in income or a complete five year freeze of healthcare costs, 61% of people said they’d choose the latter, in line with the almost half of Americans concerned that a major health event would lead to bankruptcy for their family. In the past year alone, 12% have borrowed money to pay for care and 10% had foregone treatment due to cost.
  • However, although just 39% of those surveyed were pleased with the U.S. healthcare system as a whole, 64% were satisfied in how it worked for their households. Roughly half believe the quality of U.S. healthcare is either the “best in the world” or “among the best.”

Dive Insight:

Frustrations faced by Americans in paying for healthcare are understandable given that the U.S. ranks first among the 36 OECD developed nations in healthcare cost per person.

But their belief in the supremacy of the U.S. healthcare system is misplaced at best.

The U.S. ranks 31st among the OECD group in terms of infant mortality, a key indicator of overall quality, and a depressing 28th in overall life expectancy.

While healthcare is more regulated in nearly every other developed country, mammoth bills pack a bigger punch because they can come out of nowhere in the U.S. Some 47% of Americans reported never knowing what a visit to the emergency room will cost before receiving care. Just 19% of respondents said they “always” knew their out-of-pocket costs before visiting the ER.

Outpatient surgery, visits to a physical therapist or chiropractor, and check-ups and physicals didn’t fare much better, with only 17%, 23% and 39% of respondents respectively saying they always knew their out-of-pocket costs at those sites of care.

Obfuscation of prices may lead to “risky and unhealthy behavior,” according to the West Health report. It found 41% of Americans surveyed reported forgoing a visit to the ER over the past year due to cost concerns.

And this fear over costs is affecting people at every rung of the socioeconomic ladder. West Health and Gallup found the concern wasn’t just unique to people struggling financially — it was consistent up to the top 10% of earners.

“Angst is a very appropriate word to use when you see the data,” Mike Ellrich, healthcare portfolio leader at Gallup said at the West Health Healthcare Costs Innovation Summit on Tuesday.

Political debate over fixing this problem has centered of late on drug prices, surprise medical bills, pre-existing conditions and lowering insurance premiums, which are rising faster than income. And CMS has prodded providers and payers to make out-of-pocket costs more transparent for patients.

But Americans largely don’t think politicians will be able to fix the problem, with more than two-thirds of Republicans and Democrats alike not at all confident that elected officials will be able to achieve bipartisan legislation to lower costs.

However, perceptions of quality diverged among party lines. West Health and Gallup found 67% of Republicans view the U.S. healthcare system as delivering the best or among the best care in the world. Just 38% of Democrats agreed.

“I’m all for patriotism, but this is a disconnect from reality,” Ellrich said. “This issue is not red or blue.”

 

 

 

Patient Financial Experience the New Focus for Revenue Cycle Tech

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https://revcycleintelligence.com/features/patient-financial-experience-the-new-focus-for-revenue-cycle-tech?eid=CXTEL000000093912&elqCampaignId=8479&elqTrackId=be91ef7e45814e448e63f5f449863c07&elq=c0883462d36f46f1919e194284b0fcd0&elqaid=8937&elqat=1&elqCampaignId=8479

Facing healthcare consumerism and high deductibles, providers are seeking revenue cycle technology to deliver a high-quality patient financial experience.

Hospitals and practices have traditionally relied on public and private payers to cover the bulk of patient charges and costs for their services. Everything from their revenue cycle technologies to billing workflows has been tailored to create cleaner claims, reduce denials, and collect payer reimbursement.

But in an environment of record spending and changing attitudes towards purchasing and payment, payers are starting to shift more financial responsibility to their consumers. Nearly 21 million Americans had a high-deductible health plan or health savings account in 2017, and AHIP experts anticipate enrollment in high-deductible plans to continue climbing.

Increases in patient out-of-pocket spending are driving individuals to become more discerning healthcare consumers who demand more value for the medical services they receive. Plans and policymakers argue that the rise in healthcare consumerism will ultimately result in lower cost, higher quality care.

In the meantime, however, high-deductible health plans and other increases in out-of-pocket spending are presenting challenges to providers who are not used to this new player: the patient as a payer.

Three-quarters of providers report that they are seeing a noticeable upward trend in what patients must pay out of pocket.   At hospitals, total revenue attributable to patient balances after insurance rose 88 percent from 2012 to 2017.

While payers have been steadily shifting the financial responsibility to consumers, providers have yet to adapt their workflows and systems to collect revenue from this new source while delivering a satisfactory experience to consumers.

For example, nearly all 900 healthcare financial executives recently surveyed by HIMSS Analytics said their organizations still use paper-based billing and collection strategies – despite the fact that the same survey revealed more than half of patients prefer electronic billing methods.

Patients in the survey even said they were more likely to pay their medical bills if they had the option to do so online.

In light of these statistics, providers are facing the difficult task of transforming their manual patient collection processes to address this changing, consumer-focused trend.

“What we’ve seen historically has been that the revenue cycle has been not as well funded or not as strategically prioritized for healthcare delivery networks. A lot of the decision making has been either reactive or more short-term oriented,” Joe Polaris, Senior Vice President of Product and Technology at the health IT company R1 RCM, recently told RevCycleIntelligence.com.

“But we’re starting to see more of a long-term strategic vision coming together for their revenue cycles,” he added. “Organizations understand they need to make transformative change in light of some of the challenges that are only growing in the market, especially the need to be consumer-friendly.”

Revenue cycle technologies that cater to the patient financial experience are part of that transformative change, added Matt Hawkins, the CEO of Waystar, the newly combined revenue cycle management company formed by ZirMed and Navicure.

“Innovators are beginning, more so than ever, to treat the patient as a consumer,” he said. “A lot of health systems are demanding or embracing services or technologies that get them closer to patients from the earliest interaction point.”

The demand for technologies that cater to the patient financial experience is on the rise. And providers could face significant financial losses and patient retention problems if they fail to adapt to healthcare consumerism.

Becoming a patient-centered entity that can collect what it’s owed without alienating its consumers is a significant challenge, experts agree.  But embracing a handful of high-impact strategies could help to ensure that both patients and their providers complete the payment process feeling satisfied.

PRICE TRANSPARENCY LAYS THE FOUNDATION FOR PATIENT FINANCIAL EXPERIENCE

“Consumerism” may be a popular buzzword in the healthcare industry, but providers still have a long way to go before their patients can accurately compare their clinical journeys to their retail experiences.

For one thing, patients often agree to services or procedures with no clear idea of what they will ultimately cost.

Providers rarely offer prices or price estimates to patients prior to service delivery. In fact, the percentage of hospitals that are not able to give consumers price estimates actually increased from 14 percent in 2012 to 44 percent in 2018, a recent JAMA Internal Medicine study revealed.

With patients expecting the ability to plan their expenses, providers are looking to implement new revenue cycle technologies that can deliver accurate cost estimates and boost overall healthcare price transparency.

“How do we give patients shoppable experiences, so they can find out the cost of an MRI?” asked Christy Martin, Senior Vice President of Product Management at Optum360. “In their local care market, where is the best place to go in terms of both quality and cost? Then, if they go to a certain location, what are they expected to pay based on their insurance coverage? What would the out-of-pocket costs be at this point in the year?”

Informing consumers of their patient financial responsibility before the point-of-service is critical for providers seeking to improve the patient financial experience.

“In the immediate future, one of the things that we can unlock using technology is an understanding upfront about what the payment responsibility will be, and have that help inform all of the things that happen subsequent to presenting that to the patient,” Hawkins said.

Providing price estimates up front helped one health system in Oklahoma increase point-of-service collections by $17 million in seven years.

The Consumer Priceline tool at INTEGRIS Health is a database of charges for most procedures and services. The health system also promises to deliver written price quotes to consumers within two days if the service is not already included in the database.

INTEGRIS may be seeing significant patient collection improvements using price estimates, but providers should be aware that databases like the Consumer Priceline tool require a wealth of historical financial data.

“In the immediate future, one of the things that we can unlock using technology is an understanding upfront about what the payment responsibility will be.”

Merely posting chargemaster prices for common services and procedures is not necessarily helpful for patients. Giving consumers information about their patient financial responsibility and out-of-pocket costs is supposed to prevent sticker shock. Yet chargemaster prices are primarily used to start negotiations with payers, and the numbers can seem exorbitant to consumers.

“Chargemaster prices serve only as a starting point; adjustments to these prices are routinely made for contractual discounts that are negotiated with or set by third-party payers. Few patients actually pay the chargemaster price,” the Healthcare Financial Management Association (HMFA) explained to policymakers in May 2018.

Despite reservations about chargemaster prices, CMS recently required hospitals to publish a list of their standard charges online. And providers are scrambling to understand how to present the information in a meaningful way to consumers.

About 92 percent of providers in a recent poll said they were concerned about the new hospital price transparency requirement, and the majority also expressed concerns about how the public would perceive their standard charges.

Now more than ever, revenue cycle technologies that aggregate and analyze information on what patients actually pay will be critical for health systems.

UNIFYING THE PATIENT FINANCIAL EXPERIENCE

Healthcare is nothing like going grocery shopping. Not only do consumers not have access to prices, but the funding mechanism for medical services is also vastly different from a traditional retail experience.

Unlike what happens during a retail transaction, healthcare consumers rarely pay providers directly for services or procedures rendered. Instead, healthcare consumers use insurance plans, health savings accounts, and a wide range of other funding mechanisms to eventually pay providers after a service is delivered. They may also receive several bills and benefit documents from providers and insurers before receiving the final bill listing their financial responsibility.

As patients become more responsible for their healthcare spend, the onus is on providers to simplify the patient financial experience if they want to boost collections and save their bottom line.

Delivering a navigable and consistent financial experience is key to making the most of the newly consumer-driven environment, Polaris advised providers.

“The patient wants to have a clear and transparent journey through the healthcare system, and that’s much more challenging when they have to navigate different departments on different systems, asking for the same data over and over again, never coordinating, and never communicating a holistic end-to-end experience,” he said.

Integrated and seamless revenue cycle technologies aim to deliver a consistent patient financial experience by simplifying medical bills and bringing all providers in a practice, hospital, or health system under the same billing brand.

For example, a multi-specialty physician group in central Texas boosted patient collections by 24 percent and reduced the amount of patient cash sitting in A/R from 14 to two percent in one year by unifying the patient financial experience across their organization.

“Even though we were one clinic with 60 providers, our collection process treated every healthcare encounter separately,” explained Abilene Diagnostic Clinics CFO Andrew Kouba, CPA. “Patients were receiving bills for each physician they saw, which allowed them to pick and choose which bills to pay. When you get four statements and you think you got one experience, you’re confused as a patient.”

Consolidating all of Abilene’s providers under one billing system helped the group to deliver a consistent patient financial experience, which in turn simplified the payment process for consumers.

Revenue cycle departments are finding that end-to-end systems or interoperable bolt-on solutions are worth the investment. The integrated technologies allow healthcare organizations to guide the patient through the financial experience.

But to truly advance the patient financial experience, revenue cycle technology experts agreed that clinical and financial data integration is also vital.

“Being able to leverage the clinical and billing data to provide a better patient experience all the way around is a key capability,” Martin of Optum360 stated.

“While hospitals are certainly focused on providing high-quality care, there’s also this focus on how they can improve the overall patient financial experience to reduce the confusion, complexity, and lack of understanding around patient responsibility. Health systems are looking to provide ease of doing business to address patient responsibility and reduce patient bad debt.”

Revenue cycle technologies that can leverage both clinical and financial data are crucial to transforming the patient experience into a consumer-friendly encounter. Understanding the whole patient can help providers offer a consistent experience from the front office to the billing department.

SELF-SERVICE AS THE ULTIMATE PATIENT FINANCIAL EXPERIENCE GOAL

Price transparency tools and integrated revenue cycle technologies lay the groundwork for a consistent, intuitive patient financial experience. But revenue cycle technology vendors are also observing an increased interest in self-service portals and kiosks for the ultimate retail-like experience.

The disjointed, manual processes involved in the patient financial experience have not been convenient for consumers. Patients often have to interact with a call center or sit down with a staff member to complete basic tasks like scheduling, filling out insurance forms, or paying a medical bill, Polaris explained. In other industries, these tasks have already been replaced by mobile apps or automated systems.

“With digital self-service, we automate tasks like they do in the airline industry,” he said. “We let the patient book an appointment right on their mobile phone, get all the paperwork, fill out the forms they need, and check in at a kiosk.”

“Automation takes repetitive tasks that are frankly not patient- or consumer-friendly out of the process and makes the whole healthcare experience much more satisfying,” he stressed.

Self-service portals and kiosks have the potential to truly transform the patient financial experience into a more convenient, navigable journey. But healthcare organizations would need to invest in large amounts of revenue cycle automation to achieve this goal, Polaris acknowledged.

“Automation takes a lot of forms,” he explained. “There’s always been robotics, user emulation, and basic automation to complete individual tasks. But very few organizations have driven automation of entire processes, and that’s where we’re seeing more investment in transformative automation.”

Healthcare consumers have already voiced their support for more self-service options and more automation. A recent survey of over 500 individuals showed that in addition to offering more payment options and sending simpler bills, expanding access to self-service tools was a top suggestion for improving the patient financial experience.

“Automation takes repetitive tasks that are frankly not patient- or consumer-friendly out of the process and makes the whole healthcare experience much more satisfying.”

Providers are also expressing interest in implementing the relatively new technology in the revenue cycle space. Kouba from Abilene Diagnostic Clinic in Texas said he wanted to create a type of Disney FastPass for the patient financial experience.

“We want to simplify the process from pre-registration through bill collection and try to automate that similar to Disney’s FastPass,” Kouba stated. “Disney is one of the best experiences of all time and when you go there, they want you to interact with the people, all their products, and just enjoy yourselves. The last thing Disney wants you to think of is the terrible lines.”

“If we can remove the pain points and strive to ease that front piece, the patient will be focused on a friendly conversation when they walk in the door with the person that can answer questions, rather than being pestered to pull out their wallet.”

However, Kouba is not convinced that full automation will take over the healthcare industry any time soon.

As much as adopting retail-style approaches can improve the patient financial journey, providers must still ensure their technologies and processes work for them, too.

For example, Kouba decided that self-service technology that automates scheduling is not ideal for Abilene.

“In our group, most of our physicians like to follow their patients to the hospital, so the difficult piece with self-scheduling, especially from the provider’s side, is their schedules depend on what their rounds look like for the day. It’s very difficult to get them to commit to blocks of time,” he continued.

Self-service and automated tools may still be maturing in the revenue cycle technology space. But providers still have the option to improve the patient financial experience through systems that estimate patient financial responsibility and unify the billing experience.

And providers should be looking to the revenue cycle technology market for help. The rise of patient financial responsibility has been steady. Deductibles and out-of-pocket costs have been growing, particularly since healthcare spending growth rates rapidly accelerate.

Implementing the right tools for their patients and their providers will be key to empowering patients to choose the highest value care while ensuring providers get paid for it.

 

 

 

 

Financial worries keep hospital CEOs up at night

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https://www.healthcaredive.com/news/financial-worries-keep-hospital-ceos-up-at-night/546982/

Image result for ceo concerns

Dive Brief:

  • Financial challenges, including increasing costs, shaky Medicaid reimbursement, reductions in operating costs and bad debt, ranked No. 1 on the list of hospital CEO worries in 2018, according to an American College of Healthcare Executives poll.
  • Government mandates and patient safety and quality tied for second place in ACHE’s survey of top issues facing health systems. Workforce shortages came in third.
  • A little more than 350 execs responded to the survey and ranked 11 concerns their facilities faced last year. Behavioral health and addiction issues, patient satisfaction, care access, physician-hospital relations, tech, population health management and company reorganization filled in the remaining slots.

Dive Insight:

No matter which cog in the healthcare system one blames for the skyrocketing costs of healthcare (big pharma inflating the list prices of drugs; hospitals for upmarking services; insurers for leaving gaps in care resulting in surprise bills) consumers’ pocketbooks aren’t the only ones affected.

A separate American Hospital Association-backed study predicted health systems will lose $218 billion in federal payments by 2028, and private payers (whose dollars would normally help hospitals make up the difference) have been curtailing reimbursements as well.

Bad debt was another fear in the ACHE report. Uncompensated care costs peaked in 2013 at $46.4 billion and, though the figures have decreased slightly since then, hospitals shelled out $38.3 billion in 2016. Wisconsin alone was on the hook for $1.1 billion in uncompensated care in fiscal year 2017.

“The survey results indicate that leaders are working to overcome challenges of balancing limited reimbursements against the rising costs of attracting and retaining talented staff to provide that care, among other things,” ACHE president and CEO Deborah Bowen said in a statement.

Other financial concerns included competition, government funding cuts, the transition to value-based care, revenue cycle management and price transparency.

And 70% of hospital CEOs were worried about shifting CMS regulations in 2018, along with regulatory/legislative uncertainty (61%) and cost of demonstrating compliance (59%) — unsurprising, given the current administration’s track record of unpredictability.

Patient safety and quality of care was also top of mind for health system CEOs, with over half of respondents anxious about the high price of medications, involving physicians in the culture of quality and safety and getting them to reduce unnecessary tests and procedures.

Also of interest was the high rank given to addressing behavioral health and addiction issues, according to Bowen, which ranked fifth in its first year of being included in the survey. The topic has been front and center in the industry of late, in line with the increasing recognition of social determinants of health and the breakdown in silos of care.

Ranking of the issues has remained largely constant since 2016, though in 2017 more hospital CEOs were concerned about personnel shortages than patient safety and quality.

 

Payer, provider trends to watch in 2019

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https://www.healthcaredive.com/news/payer-provider-trends-to-watch-in-2019/545612/

Ripple effects from 2018 will continue well into the new year as players deal with some massive policy and business shifts.

The coming year for healthcare will see the industry reckon with some of the massive changes set in motion last year, such as megamergers like CVS-Aetna and Cigna-Express Scripts and a judge’s declaration that the Affordable Care Act is no longer constitutional.

On the policy front, newly-installed Democrats in Congress (and the party’s 2020 presidential candidates) will be pushing for more comprehensive health coverage plans while the GOP considers tougher Medicaid restrictions at the state, and potentially federal, level.

Meanwhile, some familiar storylines are likely to continue. Effusive digital health funding and increases in mobile and telehealth services show no signs of abating, and neither does general M&A activity.

Here’s a snapshot of a few big trends for the payer and provider crowds to watch for in 2019.

Providers: Behavioral care goes primary, investment in digital

1. Narrowing gaps in population, behavioral healthcare

Historically, behavioral health services have been mostly disparate, but increased spending in digital health and a focus on lowering out-of-pocket costs will help spur greater connectivity, Sandra Kuhn, national lead for behavioral health consulting at Mercer, told Healthcare Dive. She predicted “more partnerships between traditional medical and behavioral health carriers on smaller, targeted point solutions” as the industry already began to see last year.

The trend more broadly fits into the push to recognize and act on social determinants of health.

One partnership is the Utah Alliance for the Determinants of Health, a coalition of providers, community organizations and government agencies banding together to reduce the impacts of SDOH. Their plan seeks to address socioeconomic stressors like housing instability, food insecurity and transportation — circumstances with a direct effect on mental and physical health — before patients show up in the ER lobby. Intermountain Healthcare, a primary stakeholder, invested $12 million in the initiative.

Early efforts include experimental EHR technologies, value-based payments for even more population health management programs and wraparound services. Health Affairs highlighted two separate initiatives, each making inroads on social determinants by carrying out existing population health programs in tandem with trusted community partners.

Overall, Kuhn said, more organizations will step up with tactical solutions to what has otherwise been an intractable problem. That includes payers like state Medicaid programs, many of which have begun value-based payments for behavioral health services.

Progress on behavioral and population health is happening in tandem with — or perhaps existing symbiotically alongside —  the growth of telemedicine. At Riverside Health System, a rural health network in Newport News, Virginia, a long-term telebehavioral health initiative has improved coordinated care among psychiatrists and clinical social workers, as well as replaced a chunk of services offered at the system’s nursing homes.

Riverside isn’t the first to find success with telebehavioral health, but the system’s wider experimentation with programming, a happy accident triggered by a psychiatrist shortage, has certainly shown there’s a market for it — one that Quartet, Lyra and Teladoc have been quick to capitalize on. This year will see a swath of players from across the industry tackle behavioral health gaps by complementing primary care with telemedicine.

2. Doubling down on digital

While larger health systems tend to have the means to be early adopters of new and robust healthcare technologies, physicians are beginning to integrate such services into their practices.

Use of telehealth among the commercially insured has been gradually rising since the mid-2000s, having grown 52% annually from 2005 to 2014 before spiking 261% between 2015 and 2017, according to JAMA.

Revenue cycle management firm SYNERGEN Health estimates digital health tech for remote use will grow by 30% this year, allowing patients to better manage their own healthcare, giving clinicians an opportunity to spend more time with more patients and, of course, generating new revenue streams.

As more payers hop aboard the telemedicine train and more services are covered, hospitals will continue see costs fall. A 2017 report from the Rural Broadband Association found that telehealth services were associated with an annual cost savings of $20,841 per U.S. hospital on average. The caveat here for hospitals is the very real possibility that large facilities will become increasingly more obsolete and overhead costs will become too costly as patients find yet another reason to stay away from their doors.

3. Price transparency still a question mark

Many are hoping the days of the $629 hospital bill for a wet towel and a Band-Aid are coming to an end, but it’s not likely to happen in 2019.

Still, legislators and consumers alike are making price transparency an issue in hopes of curbing skyrocketing healthcare costs.

CMS took some action last year by finalizing a new rule mandating hospitals post chargemaster rates online in a machine-readable format. But the rule is effectively toothless. Hospitals were already required to make those prices available, and chargemaster rates only apply to the uninsured and balance billing. And despite the fact that the rule went into effect on the first day of the year,  CMS admitted recently that it has no way of enforcing the mandate and would not comment on how many hospitals are currently in compliance with the rule.

“It is [our] expectation that all of them will comply,” CMS Administrator Seema Verma said on a call with reporters.

The rule doesn’t specify where hospitals need to post their charges. The only requirement is that they’re made available online, which has allowed health systems like mega-operator Ascension to bury their charges behind a tangled maze of clicks.

The company has previously defended itself in a statement to Healthcare Dive by arguing the costs can be confusing for patients, as they don’t take financial assistance and charity care into consideration. Chargemaster information, as some critics have pointed out, isn’t a very useful measure of pricing for consumers. It can actually be counterproductive.

Thomas Lee, chief medical officer at Press Ganey, speaking at the U.S. News Healthcare of Tomorrow conference, said economists don’t believe price transparency has a noteworthy impact on cost and efficiency.

“I’m predicting not much will happen and people won’t pay attention to it because the charges aren’t actually relevant to the vast majority of people,” Lee said. “If people are uninsured, I doubt they’re looking at these things either.”

If the ACA taught economists and legislators anything about American consumers, it’s that they want healthcare, but don’t want to take the time to shop around for it. In a recent Health Affairs survey, just 13% of respondents responsible for cost-sharing in their last healthcare encounter sought cost information before receiving care. Only 3% compared prices of different providers.

History seems to be repeating itself, as CMS hopes its “first step toward price transparency” will be picked up by market forces. By mandating the information be made available in a different file format, CMS believes it has “set the stage” for that data to be used by private third parties that can develop tools for consumers to use.

“There’s nothing in the rule that prevents hospitals from going further with this,” Verma said. “Hospitals can do that today.”

But they aren’t. In fact, the percentage of hospitals unable provide patients with price information jumped from 14% to 44% between 2012 and 2016, according to a JAMA study.

In short, the CMS rule is much more of a light nudge than a forceful shove into price transparency, and without regulation and the means of enforcing it, hospitals have little to no incentive to change. But expect the wheels of the price transparency conversation to continue turning in 2019, regardless.

Payers: Contract fights, a focus on value and more managed care

1. Contentious negotiations and contract disputes

As insurers have bulked up in scale after blockbuster mergers last year, Fitch Ratings expects relationships between providers and payers to be even more contentious during contract negotiations even in a value-based payment setting.

Some recent headline-grabbing squabbles include UnitedHealthcare’s contract impasse with Envision Healthcare, an ER staffing firm. Tenet and Cigna’s contract negotiations stalled and finally reached a multi-year deal this year.

Hospitals can also expect low rate increases from commercial insurers, according to Moody’s.

In markets where there is a dominant insurer and multiple hospitals, “Each hospital will need to demonstrate why it is indispensable to the insurer … and why it should be included in a network,” Moody’s reports.

However, there are potential glimmers of hope. As more states have expanded Medicaid, it puts pressure on other states to do so, which would provide a means of payment for hospitals that have gone without payment caring for the uninsured.

2. Value-based momentum

Payers and providers will continue to enter into value-based contracts in 2019 at varying degrees, according to Moody’s.

Many hospitals are engaging in contracts that offer incentives or alternative payment models for reaching certain quality measures, but very few are taking on full risk, or both the upside and downside risks within a contract, according to Moody’s.

That will continue into 2019: few are likely to take on downside risk, or the possibility of losing money, Moody’s reports.

However, while the popularity and use of these payment models continues, its cost-savings benefits have yet to be realized, according to a recent report.

Meanwhile, CMMI continues to test for ways to drive change in the healthcare by paying for quality as opposed to quantity. For instance, CMMI is testing whether it can reduce utilization and ultimately costs by addressing social-needs such as housing for Medicare and Medicaid beneficiaries. CMMI’s director Adam Boehler said he won’t force organizations to take on risk, but will help them take on a level of riskthey’re comfortable with.

But in an about-face, the Trump administration seems to be signaling that it may institute mandatory payment models that could put providers at risk of losing money.

3. Medicare Advantage still lucrative, popular

Medicare Advantage will continue to be a profit center for insurers, which typically enjoy a 5% margin, according to 2016 data from the Medicare Payment Advisory Commission.

As the population ages, it presents a growth opportunity for payers. Enrollment in MA plans grew by 8% from 2016 to 2017, according to a recent MedPAC report, as many more seniors are choosing to enroll in plans run by traditional insurers. About 34% of beneficiaries choose MA, a significant increase from a decade ago when just 10% enrolled in such plans.

Beginning this year, MA plans have greater flexibility to offer non-traditional benefits such as adult daycare, meals or in-home care to improve the overall health of patients, particularly those will high needs. CMS Administrator Seema Verma previously said 270 MA plans will offer these new benefits in 2019.

These new benefits also pose an opportunity for nontraditional healthcare companies such as Lyft and Uber, which are looking for ways to shuttle seniors to appointments and pharmacies.

Payers including Cigna touted the future growth opportunity it sees for MA.  “We are well positioned today and going forward for existing and new markets,” Cigna CEO David Cordani said of MA, according to Forbes. 

4. Medicaid managed care growth

As states weigh expanding Medicaid, it’s another potential opportunity for managed care plans to contract with states. As more states expand the program, it puts pressure on the remaining holdouts.

Last year, some red states took the issue to the ballot box and got approval for expansion, potentially providing a roadmap for stakeholders to replicate in other states where the legislatures balk at expansion. California Gov. Gavin Newsom is backing an idea that would expand Medicaid eligibility in his state to undocumented young adults, providing another opportunity for Medicaid managed care firms.

Likely potential winners are Centene and Molina. Centene is the nation’s largest Medicaid managed care firm with operations in 21 states covering more than 8 million people. Molina serves more than 3 million in 13 states and Puerto Rico.

Just recently, Molina CEO Joseph Zubretsky said even without expansion ushered in by the Affordable Care Act, $1 billion of new revenue opportunity exists in Molina’s existing footprint because of states like Illinois that are expanding Medicaid managed care statewide.

 

 

 

3+ clicks needed to find online price lists of largest hospitals, Quartz says

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The websites of 75 percent of the nation’s 115 biggest hospitals required three or more clicks to find their chargemaster, according to an analysis by Quartz.

Five things to know:

1. As of Jan. 1, hospitals are required to post their standard charges online under a CMS price transparency rule. They must present the information in a machine-readable format that can be easily imported into a computer system and update the information at least annually. On Jan. 10, CMS Administrator Seema Verma acknowledged that the information hospitals are posting “isn’t patient-specific,” but she said the federal government still believes the requirement “is an important first step.”

2. For its analysis, Quartz surveyed the websites of 115 of the largest U.S. hospitals, which receive 20 percent of all Medicare and Medicaid hospital funding. The reporters said “after spending an inordinate amount of time clicking through pages,” they found 105 hospitals’ lists online.

3. “Even among those hospitals that are technically compliant with the new rule, the vast majority don’t make it especially easy for the average person to find their pricing information. We found that most price lists are buried under many sub-menus or at the very bottom of a long page scroll,” the reporters said.

4. For six hospitals the reporters had trouble finding price lists for, they were able to track them down through a Google search pairing the name of each hospital with phrases like “price list” or “chargemaster.” Another four hospitals whose lists remained elusive to the reporters were contacted via email or phone, with three — Hackensack (N.J.) University Medical Center, Allentown, Pa.-based Lehigh Valley Hospital and Washington Hospital Center in the District of Columbia — not replying to Quartz at the time of writing.

5. Even for hospitals whose online lists were more accessible, some required hundreds of clicks to find a particular item, according to the publication. For example, Louisville, Ky.-based Norton Hospital’s 1,560-page price list had three separate pages for “treatment rooms.” At least five hospitals also requested a user’s email and name to access the data.

“In many instances, the price list is published on illogical pages. Most hospital sites have a ‘billing’ section, but, for example, the Methodist Hospital in San Antonio decided to put its standard rates on the legal page while [Indianapolis-based] Indiana University Health has placed it under the Frequently Asked Questions section of its website. Baptist Hospital in Miami published their chargemaster as fine print,” according to Quartz.

For the full Quartz report, click here.

 

 

 

As Hospitals Post Sticker Prices Online, Most Patients Will Remain Befuddled

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As of Jan. 1, in the name of transparency, the Trump administration required that all hospitals post their list prices online. But what is popping up on medical center websites is a dog’s breakfast of medical codes, abbreviations and dollar signs — in little discernible order — that may initially serve to confuse more than illuminate.

Anyone who has ever tried to find out in advance how much a hospital test, procedure or stay will cost knows the frustration: “Nope, can’t tell you” or “It depends” are common replies from insurers and medical centers.

While more information is always welcome, the new data will fall short of providing most consumers with usable insight.

That’s because the price lists displayed this week, called chargemasters, are massive compendiums of the prices set by each hospital for every service or drug a patient might encounter. To figure out what, for example, a trip to the emergency room might cost, a patient would have to locate and piece together the price for each component of their visit — the particular blood tests, the particular medicines dispensed, the facility fee and the physician’s charge, and more.

“I don’t think it’s very helpful,” said Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management. “There are about 30,000 different items on a chargemaster file. As a patient, you don’t know which ones you will use.”

And there’s this: Other than the uninsured and people who are out-of-network, few actually pay full charges.

The requirement to post charges online in a machine-readable format, such as a Microsoft Excel file, came in a 2018 guidance from the Trump administration that builds on rules in the Affordable Care Act. Hospitals have some leeway in deciding how to present the information — and currently there is no penalty for failing to post.

“This is a small step” toward price transparency amid other ongoing efforts, Centers for Medicare & Medicaid Services Administrator Seema Verma said in a speech in July.

But finding the chargemaster information on a hospital’s website takes diligence. Patients can try typing the hospital’s name into a search engine, along with the keywords “billing” or “chargemaster.” That might produce a link.

Even when consumers do locate the lists, they might be stymied by seemingly incomprehensible abbreviations.

The University of California San Francisco Medical Center’s chargemaster, for example, includes a $378 charge for “Arthrocentesis Aspir&/Inj Small Jt/Bursa w/o Us,” which is basically draining fluid from the knee.

At Sentara in Hampton Roads, Va., there’s a $307 charge for something described as a LAY CLOS HND/FT=<2.5CM. What? Turns out that is the charge for a small suture in surgery.

Which services, treatments, drugs or procedures a patient will face in a hospital stay is often unknowable. And the charge listed is just one component of a total bill. Put simply, an MRI scan of the abdomen has related costs, such as the charge for the radiologist who reads the exam.

Even something as seemingly straightforward as an uncomplicated childbirth can’t easily be calculated by looking at the list.

Comparisons between hospitals for the same care can also be difficult.

An uncomplicated vaginal delivery charge at the Cleveland Clinic’s main campus is $3,466.

Looking for that same information on the Minnesota Mayo Clinic’s online chargemaster page shows two listings, one for $3,030, described as “labor and delivery level 1 short” and the other for $5,236, described as “labor and delivery level 2 long.” But, what’s a short labor? What’s a long one? How is a patient who didn’t go to med school supposed to know the difference?

Also, those are just the charges for the actual delivery. There are also per-day room charges for mom and the newborn, not to mention additional charges for medications, physicians and other treatments.

To get at the total estimated charge, California requires hospitals to report charges for a select number of such “bundles” of care, called “diagnosis-related groups,” or DRGs, in Medicare jargon.

At the University of California-San Francisco’s hospital, for example, there are two chargemaster line items for vaginal childbirth: One is $5,497 and the other is $12,632. But there’s no indication how these differ. Consumers might then turn to the “bundled” cost based on those DRGs, where the ancillary costs are included. That lists the total charge for an uncomplicated childbirth at an astounding $53,184.

A UCSF spokeswoman said no officials were available to comment on this figure.

Though chargemaster rates are quite different from the lower, negotiated rates that insurers pay, they do become the basis for what patients pay who are without insurance or who are treated at hospitals outside their insurer’s network. Out-of-network patients are often surprised when they get what are called “balance bills” for the difference between what their insurer pays toward their care and those full charges.

Still, even knowing chargemaster rates “would be entirely unhelpful” in fighting a high balance bill, said Barak Richman, a law professor at Duke University who has written extensively about balance bills and hospital charges.

“Chargemasters are enormous spreadsheets with incredibly complicated codes that no one short of a billing expert would be able to make sense of,” he said.

Nevertheless, some experts say that merely making the charges public shines a light on the often very high — and widely varying — prices set by facilities.

Even if those charges are only “what hospitals would like to receive,” posting them publicly could make hospitals “totally embarrassed by the prices,” said Anderson at Hopkins.

Billing expert George Nation, a finance professor at Lehigh University, said that rather than posting chargemaster lists, hospitals should be required to provide the average prices they accept from insurers. Hospitals generally would oppose that, saying negotiated rates are a trade secret.

It’s unclear that the lists will have much impact. “It’s been the norm here in California for over a decade,” said Jan Emerson-Shea, vice president of external affairs for the California Hospital Association. Even so, “from a practical standpoint, I’m not sure how useful this information is,” she said. “What an individual pays to [the] hospital is going to be based on what their insurer covers.”

That could include such things as the annual deductible, whether the facility or physicians involved in the care are in-network and other details.

“The hospital piece is just a small piece,” said Ariel Levin, senior associate director for state issues at the American Hospital Association.

Still, “the biggest concern is it falls short of that end goal because it really doesn’t help consumers understand what they are going to be liable for,” she said.

 

 

 

 

The Burgeoning Role Of Venture Capital In Health Care

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The US health care system relies heavily on private markets. While private insurers, provider organizations, and drug and device companies are familiar to many, little is known about the increasing presence of venture capital in today’s delivery system. The growth of venture capital and venture capital -backed, early-stage companies (startups) deserves the attention of patients and policy makers because advancements in medicine are no longer exclusively born from providers within the delivery system and increasingly from innovators outside of it.

While venture capital -backed startups in digital health offer opportunities to affect the cost and quality of care, often by challenging prevailing modes of care delivery, they pose potential risks to patient care and raise important questions for policy makers. To date, however, an analytic framework for understanding the role of venture capital in medicine is lacking. 

A Brief History

Venture capital firms provide funding to startups judged to have potential to disrupt existing industries in exchange for ownership and some control over strategy and operations. Venture capital businesses have recently funded hundreds of startups developing technology-enabled digital health products, including wearable devices, mobile health applications, telemedicine, and personalized medicine tools. Between 2010 and 2017, the value of investments in digital health increased by 858 percent, and the number of financing deals in this sector increased by 412 percent; more than $41.5 billion has been invested in digital health this decade (see Exhibit 1). This growth far exceeds the growth of total venture capital funding (166 percent) and total number of venture capital deals (50 percent) (in all fields) in the overall economy, as well as growth in health care spending (34 percent). In 2017 alone, venture capital firms invested more than $11.5 billion in digital health, from patient-facing devices to provider-facing practice management software to payer-facing data analysis services.

Exhibit 1: Venture Capital Funding For Digital Health Versus US Health Care Spending

Sources: Data are from StartUp Health Insights 2017 Year End Report and the National Health Expenditure (NHE) Accounts Team. Notes: Dollars invested (blue bars) have units of billions. The NHE plot is expressed in trillions (T) of dollars. A deal is a distinct agreement reached between venture capital investors and a startup company, typically including parameters such as the amount of money invested and equity involved in a given startup company. 

Three key elements have likely driven this growth. First, the inability of physicians to consistently monitor patients and persistent challenges with patient adherence have created a need for digital technologies to serve as a mechanism for care delivery. Second, the increasing migration of medical care out of the hospital and fragmentation of care among specialties has increased demand for new forms of patient-to-provider and provider-to-provider communication. Third, expansions in insurance coverage and new payment models that encourage cost control have aligned incentives for technologies that aim to substitute higher-cost services with lower-cost, higher-value services.

Strategies For Disruption

The venture capital movement will likely be judged on two factors: whether it improves patient outcomes and experience, and whether it saves money for society. To date, rigorous evidence on the impact of venture capital -backed innovations is scarce. Most deals have occurred in the past few years, and most startup technologies take time to scale and are not implemented with a control group or a design that facilitates easy evaluation. Traditional provider groups may often be too small, hospital operations too rigid, and delivery systems too skeptical for a given digital health innovation to be implemented widely and tested rigorously. Moreover, data on the impact of such technologies on patients and costs may often be held privately akin to trade secrets.

However, some early small-scale randomized controlled studies have suggested potential health benefits (for example, improved glycemic and blood pressure control) of mobile health applications and wearable biosensors. Evidence may grow as startup products are brought closer to market.

Despite the shortage of rigorous public evidence, the strategies of startups to influence use and spending are apparent. Many startups target wellness and prevention among self-insured employers, using smartphones and wearable devices to engage and track patients with the hope of lowering costs through decreasing use. Although this strategy of saving money through helping people become healthier in their daily lives remains largely unproven, hundreds of companies in this space have received substantial amounts of funding. Among the most well-known is Omada Health, which provides proprietary online coaching programs and other digital tools to help prevent diabetes and other chronic diseases. It is considered the nation’s largest federally recognized provider of the Centers for Medicare and Medicaid Services (CMS) Diabetes Prevention Program, having received more than $125 million in venture funding since it was founded in 2011. 

Another segment of startups focus on a separate driver of health care costs—the prices of medical services. These firms are increasingly partnering with employers to steer patients toward lower-cost providers for expensive treatments such as joint replacements. Their path to success—creating savings through price transparency—is also largely unproven, although lowering prices through enhancing competition is a reasonable approach. 

Still other digital health startups focus on improving access to primary care via telehealth, virtual visits, and related mechanisms of accessing care. Some use biometric data (genetics or biosensor data) to facilitate early detection of medical problems. While evidence is sparse, these efforts may lead to increased use and spending. Moreover, there is no guarantee that the startup technologies will be priced below existing substitutes. To the extent that these technologies improve outcomes but at a greater total cost, policy makers and adopters of such innovations may face difficult decisions over access and tradeoffs. 

Points Of Caution 

Given differences among health care and other industries, the success of the digital health boom is far from promised. Medical evidence suggests that changes in practice typically lag behind technological advancements. For evidence-based guidelines, randomized controlled trials remain the gold standard despite their considerable expense and length, which place them out of reach for many startup technologies. In addition to showing efficacy, interventions must convincingly demonstrate that they “do no harm.” 

This culture directly conflicts with the “fail fast, fail hard” reality of venture capital, in which a return on investment is typically sought within several years. Furthermore, the complex clinical workflows of traditional medical practices offer little room for disruption without potentially putting provider satisfaction or patient safety at risk (at least in the short term). In a profession in which institutions move slowly and health is at stake, technological innovations face a higher threshold for acceptance relative to other industries.

Other barriers to adoption include: the difficulty of building successful business models centered on lowering spending in a largely revenue-maximizing system in which providers often lack the incentives to eliminate waste; HIPAA-related privacy rules and restrictions that hinder data sharing across digital platforms; incompatibility between newer cloud-based technologies that startups build and old legacy technologies used by traditional providers; and the lack of billing codes and ways of recognizing provider effort in digital health, which complicates budget or price negotiations. It is perhaps no surprise that 98 percent of digital health startups ultimately fail. 

Outlook For The Future 

In the first three quarters of 2018, venture capital involvement in health care has further accelerated. The third quarter saw an estimated $4.5 billion in digital health funding—the most of any quarter on record. As this industry grows, policy makers have an important role to play. 

Regulatory guidance is needed to shape the scope and direction of new technologies, with patient safety and societal costs in mind. Venture capital firms and startups often point to a lack of regulatory guidance on what must undergo formal approval. The current Food and Drug Administration (FDA) Digital Health Innovation Plan is a positive step toward defining the path to market for low-risk digital devices and specifying what digital health tools fall outside the FDA’s scope.

Second, a reimbursement framework for digital technologies is needed. Thoughtful debate about their prices and new billing codes should be had in an open forum. Outcomes-based pricing and other value-based approaches that go beyond the fee-for-service standard should be considered.

Most importantly, policy makers and government agencies such as the FDA, CMS, and the National Institutes of Health should study the effects of startups in health care and facilitate research on these products to inform payers and the public of their benefits and drawbacks. In the current climate, little funding has been allocated toward such research. This leaves providers and patients relying almost exclusively on industry-funded studies, at times conducted by the same startup that is selling the product or service. Publicly funded, independent studies of the impact of venture capital-backed products and services on clinical and economic outcomes are needed to establish an evidence base that patients and providers can broadly trust.

 

 

 

CMS updates hospital price transparency requirement — again

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CMS published an additional FAQ document that provides guidance for hospitals required to post their standard charges online.

In August, CMS finalized a rule requiring hospitals to publish a list of their standard charges online in a machine-readable format and to update this information at least annually. Over the past few months, CMS has attempted to answer questions about the new requirement before it kicks in Jan. 1.

CMS posted a document in September that provided the definition of “machine readable” and answered five other frequently asked questions about the price transparency rule.

CMS recently published an additional document that expanded on the rule. The agency answered seven questions about the new requirement, including one about whether hospitals are required to post information online that isn’t included in their chargemasters. CMS clarified that even if a hospital’s chargemaster does not include standard charges for drugs, biologicals, or other items and services it provides, those charges must be posted online.

 

 

 

Battle heats up between Stanford Health Care, union over hospital charge initiative

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Stanford (Calif.) Health Care and an employees union are disputing over a November ballot initiative to place a 15 percent cap on hospital charges in Palo Alto, Calif., The Stanford Daily reported.

Seven things to know:

1. The ballot initiative, initially filed in May, would place a 15 percent cap on the amount Palo Alto-based hospitals can charge in excess of direct patient care costs. Hospitals, medical clinics and other providers in Palo Alto would have to refund payers for charges exceeding the 15 percent cap within 180 days of each fiscal year.

2. The Service Employees International Union-United Healthcare Workers West sponsored the measure. It represents healthcare workers at Stanford Health Care — which has a main campus in Palo Alto.

3. Stanford University announced its opposition to the measure in a Sept. 28 statement.

The measure “would threaten Stanford Health Care’s ability to provide top-quality healthcare to patients from Palo Alto and across the region,” officials said.

“Such a policy is estimated to reduce Stanford Health Care’s budget by 25 percent, requiring significant cutbacks and the possible closure of many services and programs that are essential to high-quality healthcare in the local area.”

4. Union spokesperson Sean Wherley argued the measure will provide accountability for local healthcare providers and the city, according to the report.

“This is about transparency [and] letting people understand how much [they] are being charged, and why [they] are being charged so much more than the clinic down the street or in the neighboring community,” he told The Stanford Daily. “This is our chance as an organization to get healthcare costs under control.”

5. The union has also taken issue with Stanford Health Care’s profits, but the system said these are necessary resources to maintain its specialists, facilities and community benefit program, and that the system invests all its profit margin.

6. Palo Alto City Council members voted this summer to oppose the measure. According to the report, they attributed the decision to not having adequate bureaucratic infrastructure to regulate healthcare charges from local providers.

7. As of Oct. 3, the political action committee of the union and the opposition committee — Protect Our Local Hospitals and Health Care — had spent a combined $1.8 million on the measure.