On Jan. 1, a new regulation requiring hospitals to post payer-specific negotiated rates for 300 services kicked in.
HHS now requires hospitals to publish 70 stipulated services and 230 others online or face a fine of up to $300 per day. Some hospitals have price tools now posted online, while others are working to comply. How could hospital price transparency affect ASCs?
It's complicated, but overall, leaders in the industry see more transparency as a positive.
"Price transparency is good for ASCs," said Andrew Gwinnell, executive director of Truvista Surgery Center in Detroit. "Allowing patients to pull back the curtain will help them make informed decisions regarding their care. Our value proposition of high quality care at lower costs will be more accessible and further highlighted for the public."
KaShondra Smith, CEO at First Coast Surgery Center in Jacksonville, Fla., agreed with Mr. Gwinnell.
"Patients and their family members will finally be able to make informed, financially sound decisions proactively about their care and choose the lowest cost, greatest value setting for themselves."
The move is disruptive and could force big changes in the healthcare industry. Chris Bishop, CEO of Regent Surgical Health, sees price transparency parallels similar to how Amazon.com changed the book-buying industry — and eventually overall retail experience.
"I view healthcare as needing to undergo a pretty material change in a similar way," he said. "Consumers don't know how to shop for healthcare today. They know how to find a quality physician and follow the physician's directions. Right now, price transparency is a start to the change. It's messy, and the information isn't always presented well online, but what I know is just like Amazon, it will get better. Having those tools available to the patient will continue to evolve and become more meaningful to the patient and payer, and create more competition. With better information and competition comes better service and more cost-effective care."
Initially, hospitals posting negotiated rates online will allow patients to compare the charges and could open a dialogue between patients and physicians about cost discrepancies. But patients still won't know what they're paying out of pocket.
"While pricing is helpful, patients really need to understand what the impact is to their portion: the copay and deductible. In-network and out-of-network billing complicates this," said Julie Nelson, RN, BSN, executive director of Elmhurst (Ill.) Outpatient Surgery Center. "Medicare has an online patient cost calculator that provides patient cost for specific procedures at the hospital and ASC environments. This is an excellent tool, but I am not sure how many patients know how to find it."
Patients typically rely on physicians to determine their location of care and employed physicians often are unable to perform surgery outside of their network, Ms. Nelson said. As a result, employed physicians may perform cases at the hospital inpatient or outpatient departments, where overall reimbursement is often higher.
"I believe that private payers are starting to address this by providing reimbursement incentives to physicians to move their care to an ASC," said Ms. Nelson. "Physicians have recently communicated that BCBS is implementing a 30 percent variance in reimbursement for specific procedures based on hospital versus ASC locations. Because patients are so reliant on their physician to determine location of care, I believe that physician reimbursement models will have more of an impact on location of care than price transparency."
As a result, the new requirements may not go far enough to encourage patients to choose the ASC based on pricing.
"The intent of the legislation is very good. However, just posting negotiated rates does not give the patient any idea of what they will owe out-of-pocket and where other expenses may come from, such as anesthesia, lab and surgeon fees," said Sami Spencer, CEO of Missoula (Mo.) Bone & Joint Surgery Center. "We have had a financial counselor position for years who gives patients out-of-pocket estimates for the facility fee, the surgeon, assistant and implant fees. We also make patients aware of other potential bills such as anesthesia, pathology or durable medical equipment, so they can call and get estimates on these services as well."
There may be another problem as well. While some ASCs post pricing online for bundled rates, they are unable to post negotiated payer rates online like hospitals do because they signed confidentiality agreements with payers. The federal government superseded the confidentiality agreements between hospitals and payers with their mandate, but the same isn't true for ASCs.
Mr. Bishop predicts the federal government will eventually require ASCs to post negotiated rates online as well and provide regulatory coverage to do so. Large employers are seeking more cost effective solutions and their human resources departments will eventually provide online search solutions for their employees that allow them to compare the negotiated rates for procedures, such as joint replacements, between the hospital and ASC setting.
"Employers will get smarter about their healthcare spend and leverage those tools," said Mr. Bishop. "Transparency solutions will benefit the healthcare industry long term."
Two years ago, Regent went through a process to develop an online pricing strategy, and it continues to examine and make tweaks where necessary. Its centers don't post prices online yet because of the confidentiality agreements, but the company has the strategy on the shelf ready when required.
"We'll follow hospital industry experience closely, learn from their mistakes and follow their example promptly when we are required to do so because it is in the best interest of the patient," Mr. Bishop said.