Price Transparency in Healthcare – What Does it Mean?

Until now, costs for healthcare were anything but transparent. A majority of people receive medical services without a clear understanding of what the charges will be, how much their insurance company will cover, and that prices can be vastly different from hospital to hospital.  However, this situation is changing. New rules from CMS, which are rolling out over the next few years, are targeted to provide more healthcare price transparency to provide patients more insight and support competition within the healthcare industry.

How will greater price transparency impact you? The following summarizes what the changes will be and how they could impact patients, providers, and insurance companies:

• January 2021 – Hospitals were required to post rates negotiated with insurance companies, as well as a patient-friendly list of 300 “shoppable” services, such as hip replacement and tonsillectomies, consumers can shop from.
• January 2022 – Insurance plan data files showing in-network provider rates, out-of-network coverage rates, and in-network prescription rates must be made available.
• January 2023 – An online shopping tool for patients for 500 “shoppable” services including 70 specific services mandated by the government. The tool must include an out-of-pocket cost estimate along with negotiated pricing.
• January 2024 – The pricing tool created in 2023 must now include all remaining procedures, drugs, and durable medical equipment.

The federal government is hoping that this series of requirements will encourage new thinking in the way of medical billing and the patient experience, as well as provide patients with additional access to pricing information.  The medical industry is now provided with the opportunity to put in place tools that will make it easier for patients to understand and predict medical expenses.

Benefit for the Patient

The driver behind healthcare price transparency is to help patients better understand the cost of medical services and as one way to eliminate large surprise medical bills. By utilizing these new public databases, a patient can compare the costs of hundreds of non-emergency services to determine whether they might be able to save money by opting for another medical provider or facility. These tools and information will allow for better planning of medical expenses, lessening the chance of being surprised with a bill they are not able to pay.

Keep in mind, all of this has limits. A patient needing emergency care is not going to comparison shop before heading to the emergency room. There are some clear-cut cost comparisons like MRIs or medication, however, sometimes it is impossible to foresee all the costs for a surgery, for example. Still, the hope is that offering insight into some medical pricing will promote competition and dissuade price gouging.

Although everything won’t happen overnight, hospitals have been responding to these changes in a few different ways. There are those working to just be compliant. Then there are those who will utilize this opportunity to be more than just compliant, by completely retooling the patient billing experience. The hope is that by offering transparency, patients can plan better for non-emergency services, be more comfortable before scheduling a procedure, and not be presented with a surprise bill they were not ready for after the procedure is completed.  Offering them the ability to truly prepare can mean the opportunity to work out a payment plan, financing options or to postpone the procedure if they are unable to afford it at that time.

Insured vs Uninsured

While price transparency does not completely solve the issue of affordability, it will give uninsured patients information which will allow them to make plans for their procedures and maybe even provide some negotiating power. Power such as being able to negotiate a hospital down to the same rate that has been set with the insurance companies.

However, for the insured, it is a bit more complex as they have deductibles, copays, and out-of-pocket limits that figure into their scenario. It will all depend on their specific insurance plan as to what their final bill will be.

Will the Patient Experience Change?

The current and upcoming changes will have a direct impact on the average patient, as they will have access to pricing information not previously available.

The bigger change may be a bit more indirect. As this new regulation rolls out, consumer-friendly developments may emerge that could change the overall patient experience by allowing them to make decisions based on value, accessibility, convenience, quality, and safety.

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Who is Billed Right?

In 2006, two business partners had a vision of creating holistic services that can help improve medical billing operations. They started by listening to doctors and building a service model around what doctors need the most. As a result, Billed Right’s Revenue Cycle Management (RCM) model was born. The focus continues to be on solving the problem, rather than selling a product, and hence, Billed Right’s advanced RCM model revolves around personalized service in today’s corporate world, while still cutting costs and improving both patient care and practice revenue. No matter what challenges physicians face, we never waiver from our goal to be a partner in strategy to promote practice growth.

Contact Billed Right to learn more.