In this episode, we are joined by Fred Stodolak, CEO of Panacea, to discuss HHS’s price transparency final rule and the requirements hospitals have to follow under the rule.
Highlights of this episode include:
- Background on HHS’s final rule on price transparency and the requirements hospitals need to follow.
- What are the biggest challenges for hospitals when meeting deadlines and complying to the final rule?
- Examples of grey areas and nuances to the final rule that providers should be aware of.
- Recommendations for hospitals on creating a timetable and work plan to address the final rule.
- And more…
Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast®. Despite recent challenges, HHS price transparency rules are still in effect and require hospitals to post certain prices by January 2021. Today, I’m joined by Fred Stodolak of Panacea Healthcare Solutions, who will discuss the requirements of the price transparency final rule, and offer recommendations for hospitals as they work to implement it. Fred, welcome to the show.
Fred Stodolak: Hi, Mike. How are you?
Mike: Great. Glad to have you back. Fred, in June a federal court found in favor of HHS regarding a lawsuit that the industry brought challenging the implementation of the price transparency rule. Can you explain the broad requirements of that rule for our audience?
Fred: Yes, Mike. There are essentially two broad requirements under this rule. The first is that hospitals must develop a unique list for each hospital within their health system, of 300 shoppable items and services that includes 70 that are already defined by CMS. And the items and services selected must be their top items based on volume or revenue. And hospitals not having an online patient estimation system on their website by January 01, 2021 must at a minimum, for these 300 items, display the description of the item or service. The code, such as a HCPCS code or a DRG or an ICD-10 code. They also have to display the de-identified lowest and highest negotiated rate, as well as the negotiated rate and/or the charge for all payers, excluding federal payers, but including those Medicare Advantage plans, for example. They also have to disclose the in-patient versus out-patient setting. And if a hospital has a self-paid discount program, they have to disclose the self-paid discounted charge as well.
The second broad requirement, Mike, is that for all items and services and for each hospital within a health system the same information must be put in the machine-readable file and made accessible on the hospitals website. This file is actually primarily for payers, employers, researchers and vendors to access.
Mike: What are the biggest challenges you see for hospitals to meet the deadline and comply?
Fred: Well, Mike, the biggest challenges might simply be that there’s only four months left and quite a bit of work to pull all the information together. There’s more than meets the eye in terms of the data requirements. For example, NDC and the implied quantity level information and fee schedules and contract information for employed physicians and non-physician practitioners must be included. Additionally, hospitals may not be aware that the shoppable list is likely to include MS-DRG and same-day surgery items. They’re not just simply chargemaster items. The CMS list of 70 does include MS-DRGs. It does include private out-patient services that you would see in the chargemaster but also includes out-patient surgery items and services.
Mike: I’ve heard that there are some gray areas and nuances in this final rule. Can you describe one or two of those?
Fred: Sure, Mike, I’d be happy to. There are many grey areas for sure in where the requirements as written may not seem logical. For example, whether in the consumer display or the patient estimation system hospitals must include MS-DRG 470, which is a hip and knee replacement procedure. They must show not only the negotiated charge but the de-identified lowest and highest negotiated charge. It certainly would be misleading to calculate and only show a consumer a minimum and maximum, or in other words, a de-identified low and high for those payers that are paying based on an MS-DRG, when the rule does require for this shoppable item and for this DRG that we show the negotiated rate for all payers. So to provide the consumer with the most meaningful information and to ensure that the displayed de-identified low and high negotiated charges are comparable, and inclusive mathematically for all payers, our company will regroup all in-patient records to an MS-DRG and calculate and display the negotiated reimbursement, regardless of the method being based on a per diem or a percentage of charge, a DRG or some other negotiated terms.
Mike: Fred, they say the devil is in the details. And I was wondering if there are some aspects of the final rule that you can share, that may have not gotten much attention and that our audience needs to know?
Fred: There are many details of this rule, Mike, that can easily go overlooked without the rule itself being read. A few examples include that the rule applies regardless of a hospital’s participation in the Medicare program. And it applies to critical access, in-patient psychiatric hospitals, sole community hospitals, in-patient rehab hospitals, children’s hospitals and other specialty hospitals. Also the rule does not require federal payers such as Medicare and Medicaid to be included. However, a hospital that has contracts for these payers with third-party organizations such as for Medicare Advantage plans, will then have to include these negotiated rates.
Mike: And, Fred, before we end this podcast, can you share with our audience what Panacea recommends hospitals do now from a timetable and work plan perspective?
Fred: Sure, Mike. Here at Panacea, we are recommending that clients get started immediately and we’re implementing the following project plan and timetable with our clients. In the month of August and early September, we’re gathering critical 837, 835 patient financial system information for a recent 12-month period, along with payer contract terms, fee schedules, chargemasters, and we’re loading that data and testing it. Once tested and approved, we proceed to run our companies disaggregation algorithm and report set to develop a unique shoppable list for each hospital within the health system. It’s produced the charge and payment and allowed payment profiles for all items and services, not just the shoppable items. Our goal is to complete this step by the end of September or sooner. Concurrent with these first two steps, while not required, we do analyze the hospitals chargemaster prices with focused analytics on shoppable items, and if necessarily, restructure the chargemaster with careful growth in that revenue modeling to ensure that these items are priced rationally and competitively. This step will be complete by the end of October of mid-November for those clients that are starting soon. So with the shoppable list developed, the chargemaster restructured, the growths and negotiated charge information in-hand, we are now ready to create a validation report for our team and the clients to sign off on. And at that point, we’re then ready to produce the machine-readable file, the consumer display, or if requested, an online patient facing estimation system.
Mike: Well, certainly a complex and very timely topic, Fred. If someone wanted to read more about the solutions that Panacea has to grapple with price transparency, where can they go?
Mike: Appreciate the resources, Fred. Thanks so much for coming back on the podcast and talking to us about the latest around price transparency.
Fred: Thank you, Mike, and stay healthy.