This document discusses the importance of price transparency in healthcare. It notes that the Affordable Care Act requires hospitals to publicly report their prices. With more consumers enrolled in high-deductible health plans, hospitals need to provide price information to engage cost-conscious consumers and avoid losing business to lower-cost alternatives. The document outlines challenges to price transparency like complex pricing structures and a lack of regulations. It provides recommendations for hospitals to establish price transparency, including forming a task force, building a business case, ensuring organizational readiness, and training staff to discuss prices.

1. PRICE TRANSPARENCY
Presented by Valerie F. Barckhoff
July 23, 2014

2. Why is Price Transparency
Important?

3. Compliance with ACA Requirements
• Affordable Care Act’s Pricing Transparency Requirements
– ACA requires hospitals to report annually and make public a
list of hospital charges for items and services
• May 2014, CMS published Inpatient Prospective Payment
System (IPPS) rule proposal
– Hospitals will be required to disclose a standard list price
for all medical services they provide, OR
– Furnish those charges upon a patient’s request
– CMS encourages hospitals “to undertake efforts to engage
in consumer‐friendly communication of their charges”
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4. Healthcare Consumerism
The Centers for Disease Control (CDC) released estimates of
health insurance coverage – the results are interesting. 7
Private Coverage
Public Coverage
Unisured more than a year
U i d t f
Adults aged 18‐64
Children Under 18
0 10 20 30 40 50 60 70
Unisured part of year
Uninsured
7. Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey January – March 2103, CDC
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5. Healthcare Consumerism
Consumers are selecting High‐Deductible Plans. 7
Year Employment
‐based
Directly
purchased
70.00%
2008 17.5% 44.7% 60.00%
50.00%
2009 20.2% 46.9%
40.00%
2010 23.2% 48.0%
30.00%
2011 26.9% 52.4%
20 00%
Employment‐based
Directly purchased
2012 29.2% 54.7%
2013
(Jan‐Mar)
20.00%
10.00%
30.3% 57.8% 0.00%
2008 2009 2010 2011 2012 2013 (Jan‐Mar)
7. Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey January – March 2103, CDC
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6. Healthcare Consumerism
And a large percent have plans without an HSA. 7
25
20
15
10
CDHP (HDHP with HSA)
5
0
2008 2009 2010 2011 2012 2013
HDHP (no HSA)
7. Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey January – March 2103, CDC
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7. Healthcare Consumerism, Continued
• 85% of employers have already implemented or are
considering an increase in employee g p y cost sharing over the next
three (3) years 1
– High deductible plans are creating “shoppers” that are
price sensitive
• Families in high‐deductible plans use fewer brand name drugs,
use lower‐cost care venues, and visit doctors less frequently
• Price variation is expected to be a key driver of choice for
services that fall within the range of most health insurance
deductibles 2
1 P CH lthR hI tit t M di l tt d B hi d th b 2015
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1. PwC Health Research Institute, Medical cost trend: Behind the numbers 2. HFMA: Understanding At‐Risk Revenue Due to Healthcare Consumerism

8. Healthcare Consumerism, Continued
We know that patients in High Deductible Plans (with
an HSA) spend less on services. 8
2007 2008 2009 2010
Total ‐25% ‐8% ‐4% ‐6%
Inpatient ‐33% 6% 30% 11%
Emergency ‐17% ‐8% 8% 5%
Outpatient hospital,
ambulatory, and surgical ‐13% 2% ‐7% ‐12%
Outpatient, physicians office ‐14% 1% 4% 5%
Substance Abuse and Mental ‐22% ‐12% 2% 0%
Laboratory ‐36% ‐21% ‐20% ‐19%
Pharmacy ‐32% ‐26% ‐26% ‐20%
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8. Health Care Spending after Adopting a Full‐Replacement, High‐Deductible Health Plan with a Health
Savings Account: A Five Year Study, Employee Benefit Research Institute July 2013

9. We Need to be the Patient’s Advocate
• Patients don’t understand charges.
– According to the g IPPS proposed rule, hospitals need to
share their charges but not their actual payments
• Example:
Service Hospital Free‐Standing Imaging Center
MRI $2,100 $800
• Patients don’t understand charges versus out‐of‐pocket
• Patients don’t understand quality and value differences
• But WHICH do you think they’’ll pick?
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10. Can You Afford to Lose Even One Patient….
• Because they are concerned about their out‐of‐pocket cost?
– This is a big deal to employers and patients
– Those hospitals that achieve price transparency AND help
patients with the financial portion of their stay will earn
their trust
o And earn their business!
• And we need to face the fact that some healthcare services
are now viewed as a commodity.
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11. So, Why are Providers Resistant
to Price Transparency?

12. No Clear Regulations Exist
• Most states receive a failing grade on price transparency
regulations 3
– But that is changing.
• Example: North Carolina’s “Healthcare Cost Reduction
and Transparency Act of 2013”
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3. Catalyst for Payment Reform: 50 State Report Card on Price Transparency Laws 2014

13. Unraveling the Charge Structure is Difficult
Who can forget the Time article, Bitter Pill?
• Hospitals have:
– Inconsistent pricing within the
hospital’s department let alone across
the system
– Used strategic pricing to improve
reimbursement
– Bundle services differently
– Successfully confused patients and
regulators
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14. And Let’s Face It….
This is hard.
• Complexity of physician decision making
• Charge Description Master
• Pricing policies and strategies
• Self pay policies
• Charity care policies
• Financial counseling processes
• Out of pocket estimation
• Refund policies
• A trained, educated and motivated staff
• Organizational support
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15. How Do We Get Started?

16. We Need to Start with a Task Force!
• Identify the team.
– Executive Sponsor
– Revenue Cycle
– Financial Analyst
– Managed Care
– Physician Champion
• Keep it simple.
– Too many team members will prevent progress.
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17. Establish Guiding Principles
Consider using AHA’s Principles for Price Transparency 4 that
calls for information to be presented in a way that is:
• Easy to access, understand and use
• Creates common definitions and language describing
hospital pricing
• Explains how and why the price of patient care varies
• Encourages patients to include price as just one factor
• Directs patients to more information on financial
counseling
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4. Hospital Price Transparency, American Hospital Association March 2014

18. Build the Business Case
What services are at risk? Meaning, which ones are considered
a commodity?
• Imaging
• Colonoscopies
• Laboratory tests
• Pharmacy
• Rehab services
• Emergency
Determine your market’s shift to high‐deductible plans.
•• Some are more aggressive than others
• But according to PwC’s research, 85% of employers will be
increasing employee cost sharing over the next three (3)
years
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19. Build the Business Case (continued)
How do we determine the potential lost revenue?
• Data is limited on how consumers behavior will change
• But we can use information from the RAND Health
Insurance Experiment
– Regardless of income group, employees who selected a
high‐deductible plan used 25‐30% less services 5
– So, let’s assume that up to 30% of your “commodity”
revenue is “at‐risk” of shifting to a lower cost alternative
Are we concerned yet?
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5. Consumer Directed Health Plans and the RAND Health Insurance Experiment, J. P. Newhouse

20. Now, Let’s Look at Organizational Readiness
The Charge Description Master
• Before we can have price transparency, we need price
consistency.
– Start with price consistency within your organization.
o Within departments
o Across departments
o Across entities
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21. Organizational Readiness, Continued
Determine how your consumers will access information.
•• Website?
• Inquiry?
Regardless of how you choose to make information available,
make sure patients can find it easily!
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22. What Tools Can Support Price Transparency?
It all depends on how you define price transparency.
• Access to charges
– Is relatively simple
o But it’s not what patients want!
• Access to out‐of‐pocket (insured
and uninsured)
– Health Plans websites
– Patient payment estimator tools
o 44% of Americans would
welcome a pricing tool to
help them compare services 6
– Easy to use website
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6. Deloitte 2012 Survey of U.S. Health Care Consumers

23. Don’t Forget Policies & Processes
Policies that you’ll need to have or update:
• Discounts to Uninsured Patients
• Discounts to Underinsured Patients
– Establishing financial need guidelines
• Charity Care
• Bad Debt
• Medicare Bad Debt
• Refund Policies
– Medicare
– Patients
• Price Transparency
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24. Policies & Processes (continued)
Processes that you need to have or update:
• Financial Counseling
– Beyond Charity Care Application!
o How can you help patients pay you
– Integrating the Health Insurance Exchanges into your
processes
• Out of Pocket Estimation
• Point of Service Collection
• Patient Access Accuracy
• Eligibility
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25. Training and Scripts are Essential
Price Transparency is a difficult message to deliver.
• Consider scripting for:
– Your organization’s commitment to price transparency
– Out‐of‐pocket estimation disclaimers
– Commitment to help patients with their patient
portions
– Value and Branding
o Remember, it’s more than price!
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26. Closing Thoughts
After you have your business case, consider piloting in one area.
• The pilot should be in a high volume area
– You can get feedback quicker
– Consider having a patient focus group
• All the stakeholders need to be included
• Share the results of the pilot
– And don’t be afraid to highlight what didn’t work as
expected
And once you’re ready, have an Outreach Strategy.
• This could be a market differentiator – use it!
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27. Questions?

28. For Information:
For more information on how Windham Brannon can help you
with your Price Transparency Strategy and Implementation,
please contact:
Valerie F. Barckhoff
Principal, Advisory Services
Direct: 678.510.2838
@vbarckhoff
vbarckhoff@windhambrannon.com
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29. Windham Brannon
Windham Brannon is proud to provide tax, audit, accounting and
advisory services to y the healthcare community. As a recognized
leader in Atlanta and the Southeast since 1957, we are known for
our technical expertise and commitment to the highest level of
service. Our healthcare clients find a more proactive approach,
more attention to their priorities, and more investment in their
relationship with us to ensure their needs are anticipated – and
met with confidence.
Contact information:
3630 Peachtree Road NE, Suite 600
Atlanta, Georgia 30326
404.898.2000 | windhambrannon.com
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