Knowledge Base Article

Over the past several weeks, our series of FY 2015 IPPS Final Rule articles have included Quality Program updates (Hospital Value Based Purchasing Program, Readmission Reduction Program and HAC Reduction Program), MS-DRG updates and the discussion of a potential Short Stay Hospital Payment System for Hospitals.

Common to all three articles is the payment impact to hospitals whether it is a quality program payment incentives or penalties, new MS-DRGs impacted by the Post-Acute Transfer Rule or what payment to hospitals for Short Inpatient Stays may look like in the future.

This week our focus takes a one-eighty as we discuss hospital charges by reviewing the Final Rule discussion of the Requirement for Transparency of Hospital Charges Under the Affordable Care Act. CMS used the Final Rule to serve as an opportunity to reiterate the requirement for hospitals to share what they charge for items and services provided to their patients. Even though the text for this topic takes up less than one page of the 597 page Final Rule, it is important that hospitals are aware of and quickly put a plan in place to comply with this requirement.

What is in the Final Rule?

The discussion in the Final Rule is broken into an overview of hospital charges and the Transparency of Hospital Charges Requirement. Key information from both sections is as follows:

Overview

• Hospital charges are determined by the individual hospital for items and services provided to patients.
• What Hospitals charge and what hospitals are paid from Medicare for items and services provided are two very different amounts.
• “Hospital reported charges are used in determining Medicare’s national payment rates (for example, billed charges are adjusted to cost to determine how much to pay for one type of case relative to another.)”
• Per CMS, hospital charges “remain an important component of our healthcare system. For example hospital charges are often billed, in full, to uninsured patients who cannot benefit from discounts negotiated by insurance companies.”
• The wide variation in charges by hospital makes it challenging for patients to compare the cost of similar services.
• In 2013, CMS released inpatient and outpatient data providing hospital charges that “in general were significantly higher than the amount paid by Medicare under the IPPS or the OPPS.”
• CMS believes that this “charge data comparisons is introducing both transparency and accountability to hospital pricing, and we are continuing to pursue opportunities to report on hospital charging practices.”

Transparency Requirement Under the Affordable Care Act

Section 2718(e) of the Public Health Service Act requires that “[e]ach hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including diagnosis-related-groups established under section 1886(d)(4) of the Social Security Act.”

In the FY 2015 IPPS Proposed Rule CMS reminded hospitals of their obligation to comply with this section of the Act. With the Final Rule they reiterated the following specific guideline for hospitals:

• “Either make public a list of their standard charges (whether that be the chargemaster itself or in another form of their choice), or their policies for allowing the public to view a list of these charges in response to an inquiry.”

CMS went on to indicate that “hospitals are in the best position to determine the exact manner and method by which to make the list public in accordance with the guidelines.”

CMS’s Expectations

• Make data consumer friendly “to help patients understand what their potential financial liability might be for services they obtain at the hospital, and to enable patients to compare charges for similar services across hospitals.”
• CMS expects hospitals to update their data at a minimum annually or as needed to reflect their current charges.
• CMS will continue to post data on the CMS Web site in a consumer friendly way. Data currently posted includes:
• May and June 2013 hospital charge data release,
• April 2014 physician data releases; and
• Data on geographic variation in payments and payments per beneficiary.

Consider yourself reminded, now what?

While you as the hospital are in the best position to determine how you are going to comply with these guidelines, the question that comes to mind is what information is already available to the public? It is amazing how much data is available and yet how far we still have to go to provide data in a consumer friendly format, let alone helping the public understand that charges and costs are two very different things.

What Data is Available?

As just mentioned, there is quite a bit of information available on the internet for consumers. However, after spending quite some time looking for and at the data, I am not convinced that consumers know what is available or could understand what it means.

State Level

The National Conference of State Legislature Web Site has a Web page dedicated to Resources for transparency and disclosure of health costs and provider payments: state actions. For those interested I encourage you to visit this site to see what if any legislation has been enacted in your state.

Ultimately, what I found was that the issue of price transparency is not a new one, several states have no legislation in place and several state health price information websites are maintained by State Hospital Associations.

Examples provided on this site include:

• “California’s Common Surgeries and Price Comparisonis a website allowing healthcare consumers to view and compare the price of 28 common elective inpatient procedures at hospitals across California.
• Florida has established a Website that enables consumers to obtain data on hospitals' charges and readmission rates (http://www.floridahealthfinder.gov/CompareCare/SelectChoice.aspx).
• Maryland’s Health Care Commission provides consumers with an online hospital pricing guidethat lists, for each acute care hospital in Maryland, the number of cases, the average charge per case, and the average charge per day for the 15 most common diagnoses.
• Oregon’s website "Oregon Pricepoint," is sponsored and maintained by the Oregon Association of Hospitals and Health Systems and allows health care consumers to receive basic, facility-specific information about services and charges.
• New Jersey launched to help consumers make informed choices regarding price and quality of hospital services in New Jersey.”

A couple of other states examples that I found include:

• Iowa’s Hospital Association Web site includes their Iowa Hospital Charges Compare that “allows health care consumers to access basic information about services and charges at Iowa hospitals.”
• Virginia’sPricePoint System through the Virginia Hospital & Healthcare Association that is described as “a user friendly resource created to provide basic demographic, quality and charge information on Virginia hospitals and to promote consumer/hospital interaction. Virginia’s hospitals are committed to providing hospital charge and quality data to help consumers make informed decision about their health care.”

National Level

The CMS releases Medicare Provider Utilization Payment Data

On May 8, 2013 the Department of Health and Human Services (HHS) released new hospital charge data. The data posted was comprised of charges for services for the 100 most common Medicare inpatient stays. In a related Fact Sheet, CMS indicated that “this data enables comparisons between the amounts charged by individual hospitals within local markets, and nationwide, for services that may be provided during similar inpatient stays.”

American Hospital Association (AHA) and Price Transparency

A search for “hospital price transparency” on the AHA website resulted in about 841 items. There were two recent items of interest to share with you in this article.

• A March 21, 2014 Issue Paper: Hospital Price Transparency that provides a background, current initiatives and the AHA Principles for Price Transparency.
• The August 15, 2014 release of the resource “Achieving Price Transparency for Consumers: Toolkit for Hospitals.” According to the AHA, “this resource will spark conversation and action by allowing hospitals to assess their current efforts and learn from others through case examples and sample price transparency tools.”

If you are unsure where to start I encourage you to look to the examples of hospitals efforts in the AHA Toolkit. Whatever you choose, remember that you are in the best position to determine how your facility will comply with the price transparency requirement in the Affordable Care Act.

Resource:

FY 2015 IPPS Final Rule pages 50145 – 50146 at:

http://www.gpo.gov/fdsys/pkg/FR-2014-08-22/pdf/2014-18545.pdf

Link to Medicare Provider Utilization and Payment Data CMS webpage:

http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html

This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.