Revenue Cycle Management Journal Source: The Academy of Healthcare Revenue
Effectively Responding to Calls for Pricing Transparency
Rising consumerism in healthcare has become a focus for many providers nationwide due to the growing number of consumer-driven health plans (CDHPs) and continually increasing out-of-pocket costs for patients. As a result of these trends, calls for pricing transparency have become much more prevalent than in the past. Organizations that prepare for the demand for accurate and easily obtainable pricing information will be in a stronger position to serve their existing patient population and attract new patients.
Consumer-driven health plans are one of the greatest contributors to demands for healthcare pricing transparency. Patients with CDHPs assume a much greater role in making decisions about their healthcare services. CDHP-covered patients choose where and when to receive healthcare in the same way they would with goods or services from any other industry—that is, based on cost and quality (information which, in the case of healthcare services, may or may not be readily available). In order to make informed decisions about where to receive care, patients need reliable data about the exact costs of their healthcare treatments. In fact, respondents in a recent study that surveyed more than 1,000 CDHP-covered patients indicated that being informed of their estimated out-of pocket costs upfront was the most useful healthcare cost information they could receive.1
With this in mind, what can providers do to effectively respond to patients who expect accurate price estimates before they receive services? One organization that has taken effective steps to provide estimates is Omaha, Nebraska-based Methodist Health System, a non-profit system with two acute-care hospitals and a network of physicians’ clinics. The system’s two hospitals collectively have about 690 beds.
In May of this year, Methodist Health System implemented a robust system that enables staff members to provide patients with highly accurate out-of-pocket cost estimates before health services are rendered. In the past, the organization performed the price estimation function manually— often a time-consuming and arduous process—and only provided patients with the hospital’s total charges for services. However, like many healthcare providers, Methodist’s listed charges did not necessarily reflect what patients would ultimately pay out-of-pocket as accurately as the organization wished. To streamline the price estimation process and improve patient service and satisfaction, Methodist’s revenue cycle leaders decided to automate the process.
To develop a pricing estimation system that would answer all of the organization’s needs, Methodist’s revenue cycle decision-makers worked with the organization’s CIO to compare the cost and functionality of several different solutions. The solution that was implemented incorporates historical information from Methodist’s own claims data and chargemaster, as well as verified contract information from third-party payers. The system also utilizes patients’ coinsurance, deductible, and co-pay information in order to calculate patients’ estimated out-of-pocket expenses.
Methodist’s leaders decided to start the rollout of the system slowly, to ensure accuracy and make certain that staff members were able to effectively utilize the new tool. The decision was made to first offer pricing estimates for scheduled inpatient surgeries, and then to move into diagnostic areas such as CT scans, MRIs, and others.
“Part of the process was to ‘crawl, then walk, then run,’” says Robert Wagner, Methodist’s Corporate Director of Revenue Cycle and a key member of the price estimation system’s implementation team. “We wanted to make sure we were comfortable with everything we were doing, then keep expanding our use of the system up to the next level.”
One week before the system’s initial rollout, the software vendor’s representatives visited the hospital and trained each Methodist staff member on the system for a half-day or more. Managers, supervisors, and staff members from Methodist’s scheduling, insurance verification, and customer service areas received the vendor training. Methodist provided its own internal data to the software vendor before the training sessions began so that the training program used real examples from Methodist’s records rather than hypothetical examples made up by the vendor.
Including training and integrating the new software into existing IT systems, the initial rollout of the price estimating software took about eight weeks. To ensure that the pricing system was loaded with the correct nomenclature, terminology, and CPT codes for services, HIM staff members worked with the implementation team to enter this information into the system.
Now that the system rollout has occurred, Methodist’s pre-access department receives daily rosters of scheduled appointments up to nine days ahead of patients’ scheduled service dates. Rosters are divided among pre-access staff members and insurance coverage is verified for each account, with staff members confirming patients’ benefits, deductibles, co-pays, and maximum out-of-pocket levels. Staff then identify the procedures and tests each patient will receive, and enter the services and all of the other data they have gathered into the pricing system. Based upon the contractual agreements that have been pre-loaded into the system, staff members are then given patients’ estimated financial responsibility for their scheduled services. Pre-access staff members work patient accounts up until the day before services are provided.
As a result, “Patients are ultimately more satisfied because they know their financial obligations and can make arrangements,” says Barb Mahoney, Methodist’s Manager of Insurance Verification. She adds that Methodist’s patient access staff members are now responding to 100 percent of patient requests that come in via the phone or internet, in addition to estimating prices for all scheduled inpatients. Estimates are accompanied by a disclaimer explaining that the estimate is based on information furnished by the patient. The disclaimer emphasizes that the final patient financial liability could change based on the presence of unexpected complications or additional services that must be performed.
The volume of accounts being estimated through Methodist’s enhanced pricing estimate process is growing. In the first week of the system’s implementation, internal price estimates were calculated for around 150 scheduled inpatient accounts. This number has grown to almost 400 accounts per week. The number of patients contacting the organization for pricing information has also grown to around 10-15 estimate requests per week. With the availability of pricing estimates featured prominently on Methodist’s website, as well as advertising and direct mailings to patients informing them of pricing estimate availability, the number of pricing requests is expected to continue growing.
Because the system was implemented so recently, Methodist does not yet have statistics on how the price estimating system has impacted patient satisfaction or patient volume. However, the feedback Methodist has received from patients thus far has been “very positive,” according to Wagner. Another effect the estimating process has had is reducing denials and re-work in the business office. “The billing manager has said that we’re having fewer re-bills and denials for reasons like ‘coverage terminated’ or ‘not our insured,’” says Wagner. “Because we know we’re getting accurate information at the front end, we’re getting the claim out right the first time. So we don’t have to contact the patient or try and come up with information six weeks after the service has been provided. We know now when we bill that we have the right data, and we’re only going to have to bill it once. If there’s any issue on the claim, it’s not because we have the wrong insurance information. We’re going to have fewer re-bills and denial management issues to contend with.” This will eventually allow Methodist to shift some billing staff members to the front end to perform insurance verification and price estimating tasks.
With increasing consumerism in healthcare, offering patients clear, accurate, and easily accessible out-of-pocket pricing information will become an expectation for healthcare providers. Organizations that prepare for this trend by implementing robust tools and processes for creating accurate estimates, such as Methodist Health System, will be able to effectively respond to the trend toward consumerism, while simultaneously improving patient satisfaction and growing market share.
1 Gary Ahlquist and Charles Beever, et. al., “Consumer and Physician Readiness for a Retail Healthcare Market,” Booz Allen Hamilton, 2007.
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