Price Transparency Isn’t Complicated If You Are in Control

Providers realize that it isn't the transparency that's complicated. Surgical price transparency is made complicated by the rules and terms and conditions that third-party payors mandate in their participation agreements.

We follow many industry newsletters, white papers and advertising collateral content. One we recently reviewed for a new software seller starts with “Don’t panic. We can help” in their opening salvo. 

Upfront price transparency is actually quite easy once you adopt the formula that helps you accurately configure your prices. The price is the price. That’s that.

Where the complication arises is when the cost to collect what you are owed jumps to more than 25% of revenue (currently nationally-pegged at about 28% of revenue under most Managed Care and Medicare Advantage and Managed Medicaid plan arrangements).  If there was only one system, and then cost to collect was transparently published, and all embedded TPA and other kickbacks were transparently listed as “add ons”, we’d have a different perspective on “value-based purchasing”. 

One thing that our expert, Maria Todd, of AskMariaTodd® explains is that “providers must rethink their perspective about bundled case prices and surgery price transparency. You don’t need a price estimation engine. That’s for the foot draggers.  You need a pricing integrity engine that outputs a quoteable, inclusive, easy to comprehend, relevant and reliable price.”

A rules-based engine isn’t a big expensive software. It is a proper formula you can construct in a spreadsheet application using pivot tables. If only you could get the providers to supply the rates they are willing to pay in a single, comprehensive  and unequivocal listing. But they often only want to commit to 10 prices as a sampling. “That’s nonsense!” says Todd, “And it should be met with ridicule, rebuke and rejection for the nonsense that it is.”  How can a provider accurately communicate what the patient has to pay if the claims adjudication rules are a secret, the rules-based engine of the Payor or TPA is a secret, and you only receive a “sampling” of ten CPT codes when your facility offers close to 60,000 procedures?”

Todd adds, “Many plans flat out refuse to provide the necessary formula to audit their payments with contractually negotiated rates. In fact, years ago one plan in Ohio said that if they had to supply the DRG Cost Weight Conversion Factors they would prefer to cancel the contracts of a five-hospital system in Cincinnati. I told them not to let the door hit them in the …”

A patient ought to be able to say, “the facility charges a bundled price for the surgery I need of $XYZ and the plan ought to provide the estimate stating, “here’s your remaining deductible, your copayment amount, and the maximum allowable we will pay will result in your out of pocket financial responsibility of $ABC.”  The provider’s bundled price should be the constant (K) that is then translated to the plan’s allowable and other variables.  The patient portal to allow this should be on the payor’s portal, not the provider’s portal. What should be on the provider portal should be the price. The K. The price charged for the deliverable by a CPT code. And then, if discounted, that should be on the group health plan’s portal. End of discussion.

To be user-friendly for patients, a software need not combine estimated costs from hospitals, physicians, anesthesiologists, radiologists, and other external providers because if they are not all under one Tax ID, their prices are nobody’s prerogative to restate. What if you miss an update? What if you misinterpret? “Providers who estimate bundled case pricing without a contract between those providers cannot present a comprehensive, inclusive estimate that patients can rely on.  There’s no basis of assumption to do so without a contract in place listing what you’ll pay the other providers out of the bundled price payment” says Todd.  

If you have different prices based on different sites and different surgeons and different overheads, then post each accordingly. All you need to do is maintain the Master tables in your pivot table and your formulas. Price integrity is something that hospitals and ASCs and medical clinics with outpatient surgery theaters will need to deal with. That role must answer to the CEO or CFO and interact with procurement specialists and HR to maintain supply costs, staffing models and staffing costs. 

The rate should be quotable prior to the anticipated procedure being carried out. And then reconciled when medical care has been completed. The patient should be able to rely upon the estimate unless there is a reasonable and plausible explanation for why the price turned our to be higher or lower. The patient’s financial responsibility should be so reliable that they could pay in full in advance using a single line-item bundled-price bill that makes sense. Then, if they need financing, they know how to calculate what they’ll ultimately pay. If they are relying upon HSA funds, they should be able to determine how much they can withdraw to pay. If the employer-sponsored health plan doesn’t pay all, then they should have a solid understanding of their portion.

“One of my clients adopted this philosophy some time ago with a “pay how much and when you want” approach with payors. They stated the price on 220 surgeries and said, “If you pay same day or in advance, you get this price. If you want to pay later than same day, you tell us when you want your payment due and we’ll tell you what your options are in terms of carrying costs and cost to collect. You choose.” Having presented it this way, 100% of their self-funded employer contracted plans chose to pay via ACH same day. You don’t ask; you don’t get.” says Todd.  One TPA rep told me that’s just not possible. 

Phooey!  If you get an instruction to pay a claim from the trust fund via ACH on a certain date to an in- or out-of-network provider, you charge the employer an extracontractual payment fee if applicable, and do what your client instructs. Case closed. That’s possible and if you cannot, go tell it to your client, and start prepping to lose the account.