Consumerization in healthcare has taken a long time to gain critical mass, but newly proposed price transparency rules designed to increase hospital competition and reduce costs may force the industry to a tipping point. Though CMS’s rules fall well short of achieving their stated objectives, innovative hospitals are turning this challenge - and a new kind of transparency - to their advantage.
Back in 2004 when high deductible health plans (HDHPs) were introduced, health plans assured employers and their covered employees that patients’ higher out-of-pocket exposure would result in more cost-conscious patient behavior and reduced overall costs. We now know that didn’t happen. Why? Because patients have never been given the information they needed to make better, more cost-effective choices.
That’s changing. Maybe. On Jan. 1, 2019, The Centers for Medicare and Medicaid Services (CMS) enacted new rules requiring healthcare providers to make their standard rates available to the public over the Internet. For 2020, CMS is proposing to up their requirements to make available “specific negotiated charges for common, shoppable services in a manner that’s consumer friendly.” These are the non-standard rates that hospitals negotiate with health plans that nearly everyone actually pays.
In the release announcing the proposed rules, Alex Azar, Secretary of the Dept. of Health and Human Services (HHR), stated that the president “has laid out a clear vision for healthcare: a patient-centered system that puts you (the patient) in control and provides the affordability you need, the options and control you want, and the quality you deserve. Providing patients with clear, accessible information about the price of their care is a vital piece of delivering on that vision.”
Healthcare providers and payers have been quick to voice their opposition to these measures as reported in a story by Shannon Muchmore for HealthcareDive. In it, industry representatives point out what they see as deficiencies in CMS’s existing and proposed rules. Among them are the complexity of treatment and its associated prices, legal enforceability and doubts about the approach’s ability to meaningfully impact prices. Some, like the American Hospital Association, and others have stated that “publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”
These are sound arguments that underscore the industry’s reluctance to adopt CMS’s blunt instrument approach to a very complex problem. But industry economics are driving provider- and payer-driven change to respond to increasingly stressed patient populations. Populations that have not demonstrated a willingness to choose lower priced alternatives up to now, but whose behavior is showing clear signs of readiness to reduce their personal costs and participate in selecting where and how to get their healthcare.
Putting the Patient (Customer) First
With regulators and consumers all demanding “options, control, quality and clear information about the price of care”, the onus is now squarely on healthcare providers and payers to deliver the information and resources patients need to get and afford the care they need.
Many in the healthcare industry are uncomfortable with the notion that their patients are customers. As mission-driven organizations delivering highly skilled care in sophisticated settings, they prefer to think in terms of relationships. But more and more, the opportunity to create and sustain those relationships is undermined by financial burdens that cause as many as half or more of prospective patients to delay or avoid care entirely.
Additionally, cost trends have driven a dramatic behavioral shift among younger generations toward more transactional relationships with their healthcare providers. These consumers care about convenience, cost and accessibility through technology. For them, the traditional primary care model of healthcare delivery is ungainly, increasingly less relevant and too costly (in terms of both time and money). In an article published earlier this year, we explored this demographic trend and its growing impact on an industry that’s prime for disruption.
Thriving in The New Healthcare Economy with Another Kind of Transparency
The challenges of delivering reliable cost transparency are formidable, but done correctly the rewards are compelling. The healthcare industry is changing rapidly, inviting disruptive new entrants such as Haven Healthcare (the Amazon, Berkshire Hathaway, JP Morgan Chase joint venture), and vertically integrated companies like CVS Health (Aetna + CVS). For healthcare providers who adapt, the opportunity to compete and win is real. And the time to act is now.
In analysis published by PwC late last year, titled “The New Health Economy in the age of disruption”, the authors observed that “Consumers are ready for healthcare to mirror other parts of their lives in terms of convenience, transparency, choice and affordability. Companies that invest in a deep data-driven understanding of their customers will win.” In other words, those who develop the capacity for what we at Loyale call “systemic transparency”.
The same PwC analysis quotes Sharecare CEO Jeff Arnold, stating that “I think the healthcare companies that are going to emerge and going to make a difference are the ones that are fluent in three languages. You have to be fluent in healthcare. You have to be fluent in technology, like analytics and artificial intelligence. And you have to be fluent in media, in driving discussions and having dialogues with patients to make them feel a certain way.”
By developing and leveraging systemic transparency, hospitals and other providers are finding that the resources needed to respond to today’s challenge are at hand. Using a Patient Financial Engagement platform like Loyale Patient Financial Manager, providers are able to deliver compliant price transparency, patient-centered affordability options and personalized, adjustable payment plans that work.
By leveraging systemic transparency and platform-generated data, patient communications can be personalized based on a patient’s expressed and inferred (behavioral) preferences. The cost of collections (including patient bad debt) can be reduced, and provider workflows can be automatically designed for greater efficiency and better financial outcomes.
Imagine a patient experience that unites the clinical, administrative and financial dimensions of care into a single, holistic whole. It’s not easy, but it’s possible and it’s available to providers today. To illustrate, consider this hypothetical, consumer-centered patient care journey…
- The patient has been diagnosed as needing a knee replacement (or suspects the need). Input: provider diagnosis or patient self-diagnosis (a precursor to seeking care).
- The patient checks Hospital A’s website for prices related to the procedure, prices that include all the usual ancillary services and reflect any discounts the patient’s health plan may have negotiated and include the patient’s out-of-pocket expenses. Input: eligibility and estimation solutions such as those offered by TransUnion or Experian, health plan payer such as Aetna or UnitedHealth Group, Loyale for calculation, aggregation and presentation.
- The patient then checks to see what kind of payment options are available to manage their personal expense. Options may include payment incentives for prompt or upfront payment, short-term provider funded payment schedules or competitive third-party financing for longer term obligations. Input: patient finance companies like CareCredit or ClearBalance, then aggregated and optimized for personalized, interactive presentation by Loyale.
- Armed with price information and mindful of Hospital A’s reputation for quality, the patient schedules care. Input: Electronic Medical Record systems like Epic, Cerner or Allscripts; registration services from companies like One Medical Passport or HealthNautica for appointment scheduling with Loyale patient financial engagement for integrating and presenting clinical and financial information in a single, patient friendly format.
- The patient reviews the payment plan options and selects a third-party financed option to bring payments within their monthly budget. Input: Provider-defined plan parameters, Care Credit or other finance provider, Loyale analytics to configure optimal payment plan configuration, Loyale Patient Financial Manager or Affordability Workbench for data-driven plan design and presentation.
- Treatment is scheduled and delivered – Input: EMR data confirming that care was not abandoned, length of time between care scheduling and delivery and the length of time between delivery and billing; behavioral analytics from PatientBond; Loyale to capture patient payment behavior for business intelligence, with provider alerts and adjustments to optimize for payment.
- Patient receives personalized messages over the phone, via text or on computer. Online, the bill is aggregated to include all of the charges associated with the delivery of care including, for example, hospital, anesthesiologist, physician, physical therapist, etc. in one easy to understand presentation. Inputs: Provider and EMR data, applicable patient finance data.
- Patient receives periodic electronic communications with reminders about upcoming automatic payments or payments due using patient’s preferred communication channel. Inputs: Loyale
- Patient completes payment and the care episode concludes. Input: payment processing companies such as FirstData, globalpayments and worldpay.
This sample scenario presents a glimpse into the capabilities that are within reach now. Healthcare providers can do much more than merely respond to CMS’s intensifying transparency requirements. By unifying disparate systems and processes into a single, satisfying patient experience across the entire enterprise, providers can comply where it matters most - with their patients and markets. Consumers are begging for it and the competition is investing big to deliver. Will healthcare respond?