Price transparency is growing, but hear lessons from frontrunners first
By Joy Daughtery Dickinson
EXECUTIVE SUMMARY
Consumers are shopping around before they schedule where they’ll have their surgeries, and so are employers. Outpatient surgery providers and facilities are responding by posting prices.
- One facility boosted the number of cash-paying patients by 5-10% after six months.
- Posting prices requires a significant investment of time, money, and marketing. With multiple providers involved, it can be difficult to determine codes and prices.
- Spell out what is and isn’t covered.
Patients traditionally have come in for outpatient surgery, then you would send them a bill. The patients might be surprised by the price, but they usually would pay. However, that system doesn’t work well for consumers who are increasingly conscious of prices. Even patients with insurance are more sensitive about prices due to plans with high deductibles and copayments.
“Healthcare is really the only service provided where the consumer has little to no idea how much they will ultimately pay for it,” says Trenton R. Mattison, MHA, chairperson of the board at North Texas Endoscopy Centers (NTEC) in Dallas-Fort Worth and division vice president of operations at Dallas-based AMSURG. NTEC posts its prices at http://northtexasendo.com.
Traditionally, “it is sometimes weeks after the service is delivered that the consumer knows what he or she will pay,” Mattison says. “This is clearly not a recipe to control costs, increase competition, and enhance accountability of rendered medical services.”
Consumers are shopping around before they schedule where they’ll have their surgeries. So are their employers. Outpatient surgery providers and facilities are responding by posting prices, and many say they are reaping the benefits.
The only surprising thing about price transparency is that it is just now taking hold, some providers say. Jerry A. Hadlock, CRNA, director of anesthesia at St. George (UT) Surgical Center, says, “It’s crazy that it’s such a novel idea.” Hadlock develop the transparent pricing system for his facility, posted at http://www.sgsc.net. “If you’re going to fly to LA, you know the price before you go. At the supermarket, you know the prices before you check out. Why should healthcare be any different?”
Surgery centers aren’t the only ones posting prices. The Centers for Medicare & Medicaid Services publishes hospital-specific average charges and average Medicare reimbursement rates for the 30 most common outpatient procedures and the 100 most common inpatient procedures. More than 30 states require hospitals and/or surgery centers to release information on some charges, and a few rely on voluntary disclosure of charge data. (See story in this issue about how Virginia is posting prices.) Increasingly states require healthcare providers to post their prices. Some states require insurance companies to report their payment rates for healthcare providers, and a few are making those prices available to patients. There are also web sites, such as PricingHealthcare.com and NewChoiceHealth.com, which help consumers compare prices.
Stand out
Mattison and others see price transparency as an opportunity for freestanding surgery centers to demonstrate their lower prices, when compared to hospitals.
He gives the example of a Medicare patient who has colonoscopy in the Dallas-Fort Worth area. That patient will receive a 45% discount at an independent ASC versus a hospital outpatient department (HOPD), Mattison says. “The discount is even higher for a Medicare beneficiary, around a 75% discount, when all outpatient procedures are taken into account,” he says. “This is staggering, not well known by the public, and often hidden from the public as the name of the facility may not identify the facility as owned and affiliated by the hospital.”
However, hospitals are jumping in with price transparency as well. “We want to equip them with the information they will need to make an informed decision by giving them this price transparency,” says Steve Schaefer, vice president of finance for the Virginia Mason Health System in Seattle. Virginia Mason posts estimated prices for its 100 most common outpatient surgical procedures at http://bit.ly/1zGz9c3.
“These are self-pay prices,” Schaefer says. “If an insured patient would like to know their personal out-of-pocket expense after insurance, we also can provide that information with our Patient Cost Estimator service.”
Potential patients not only are examining costs, but also quality, he says. Virginia Mason has a quality section on its web site with links to several quality reports, including Hospital Compare (https://www.virginiamason.org/Quality).
Consider pros and cons
There is a payoff to transparency, sources say. Posting prices boosted the number of cash-paying patients at St. George Surgical Center by 5-10% after six months, and the center is seeing referrals, Hadlock says.
“It’s helped us reach out to patients and consumers we normally wouldn’t get to our center,” he says. Several out-of-state patients have found the center online and scheduled vacations before or after their procedures in the area near the Center, which includes two national parks.
When you move toward posting your prices, know upfront that you will be making a significant investment in technology because many ambulatory facilities don’t have cutting-edge information technology, sources say.
Getting out the word took a lot of time, money, and marketing, Hadlock warns. Most of the financial investment was in the web site development, he says.
“The financial investment is in the tens of thousands of dollars when it is all said and done, and we feel like we did it on a pretty tight budget,” Hadlock says. “It is an ongoing process that will take thousands of dollars more to complete in build out and marketing, but definitely well worth the rewards.”
A work in progress
It took about eight months to get the web site to the point where they wanted it, but it’s still a work in progress, he says.
“That investment was huge, but even bigger was the time investment,” Hadlock says. Most of that investment came from Hadlock, who worked on the new pricing system for several hours daily after finishing his cases.
Providers had to be persuaded to take away the “veil of secrecy” on prices, he says. Additionally, surgeons had to go to their billing company to find out what they charged. And Hadlock points out that his center probably had less of a time investment than others because anesthesia staff are full time at his center. “Hospitals would have to negotiate with surgeon and anesthesia providers; we really only had to negotiate with the surgeon,” Hadlock says.
Under the new transparent system, surgeons are happy to get paid in cash on the day of service, he says. “We pay them before they leave, sometimes before they’ve even started the case,” Hadlock says.
Even though his center is located in a smaller town, they’ve been able to recruit surgeons with the new system, he says.
Caveats on costs
NETC publishes only Medicare reimbursement rates because those are published rates, Mattison says. One reason is that the providers generally negotiate different amounts with different private/commercial insurance companies for the same procedure, Mattison says.
“Due to private insurance contracts having nondisclosure clauses, and in many situations a provider does not know the CPTs they are obligated to use until post procedure, it makes it challenging if not impossible to be completely transparent on the price a patient pays,” he says.
Mattison points out that several providers are involved in the price: the surgeon, anesthetist, facility, pathology lab, and pathologist. “Often it is unknown until the procedure or service is performed which and how many CPT codes must be billed to comply with federal and insurance law,” he says.
Another challenge is that the amount the provider charges isn’t the same as what the consumer pays, because Medicare assignment and private insurance reimbursement is based on those charges but not the same. “Therefore, Provider A charging double Provider B has no relevance to whether the patient will pay more, much less double, if they see provider A,” Mattison says.
The bottom line is that patients want to be engaged, so they can make informed choices, he says. “We are attempting to assist them in having these discussions with their physicians prior to services being delivered so they are best informed,” Mattison says. “...[O]ur hope is the takeaway from our website is the consumer engages their physician in the discussion on where they are being referred, how much it costs, what the alternatives are, etc.”
Spell out what’s included
Be sure to list everything included in your listed price, Hadlock advises.
“The healthcare consumer deserves to know the price, all inclusive, with no hidden fees,” he says.
Ensure patients know that unexpected circumstances might mean the surgery ends up being more costly than estimated. Schaefer says, “We communicate this reality on our web site, and for patients who seek a cost estimate, we also inform them of the fact that these are just estimates, and actual total costs will be based on the total amount of services provided.”
However, you still might have a misunderstanding with patients, he warns.
“We try to be as clear as possible, but gaps between prices and actual out-of-pocket costs exist,” Schaefer says. “That’s why we have hired financial navigators at Virginia Mason to help each patient with their own unique coverage and out-of-pocket expense questions and needs.”
St. George Surgical Center’s web site includes a list of what is not included in the surgery price:
- any diagnostic studies necessary prior to the surgery such as lab, MRI, and/or X-rays;
- consultations with specialists to determine medical risk/management, physical therapy, and rehabilitation;
- any hardware or implants necessary for completion of the procedure (plates and screws, e.g. for orthopedic procedures); however, price information for hardware/implants is provided prior to surgery and provided at invoice cost. Copies of invoices are provided;
- any overnight stay not indicated to be included with the surgical procedure. An overnight stay can be arranged for an additional price;
- lodging and travel expenses;
- expenses or fees resulting from complications subsequent to the completion of surgery and discharge from the facility.
There is no agreed-upon standard regarding what is or isn’t included in posted prices, so some facilities include all costs, while others include only the OR cost.
Despite the caveats, managers who already offer transparent pricing urge others to join in. Hadlock says, “It’s an ideal situation for every ambulatory surgery center, and every ambulatory surgery center should be doing this. If not, they’ll get left behind.” (For more information on this topic, see “How you can address price-shopping patients,” Same-Day Surgery, September 2014, p. 94.)
Resource
- The Healthcare Financial Management Association Price Transparency Task Force has issued price transparency recommendations for healthcare providers, health plans, and others. The recommendations are free. Web: http://bit.ly/1eIh9ZF.
Guide offers information about outpatient providers and charges
Patients traditionally have come in for outpatient surgery, then you would send them a bill. The patients might be surprised by the price, but they usually would pay.
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