This document discusses healthcare consumerism and the myth of price transparency. It notes that while consumers want simple, clear, and actionable price information, finding such information is challenging. Regulations now require hospitals to provide pricing information, but hospitals often struggle to understand their own costs. The document outlines factors that have historically impacted hospitals and discusses how advanced cost accounting can help hospitals better understand their true costs and align prices with costs to improve transparency. It concludes by asking attendees if they would like to enter a drawing or learn more about Health Catalyst's products and services.

1. © 2021 Health Catalyst
© 2021 Health Catalyst
February 24, 2021
Deb Gordon and Pat Rocap
Healthcare Consumerism and Cost:
Dispelling the Myth of Price Transparency

2. Agenda
Price Transparency Through a Consumer Lens
• What consumers mean by price transparency
• The cost of confusion
The Missing Link: Prices and Costs
Why Transparency Matters to Providers
• Consumer expectations
• Federal price transparency regulations
How to Start Your Transparency Journey
2

3. 1. What kind of organization do you work for?
• Hospital – 15.12%
• Group practice – 4.65%
• Health center/clinic – 4.65%
• Health plan – 6.98%
• Other – 68.6%
2. What is your role?
• Administrator – 16.16%
• Physician – 2.02%
• Nurse or other clinician – 10.1%
• Billing/finance staff –9.09%
• Other – 62.63%
POLL QUESTIONS: Tell us about yourself!
3

4. Healthcare in the Headlines
4

5. Google US
Healthcare is:
• Broken
• Expensive
• Bad
• The Best
• Not a Free Market
• Good
Healthcare is
COMPLEX
US Healthcare IS….?
5

6. Price Transparency Through a Consumer Lens

7. What Consumers
Mean by Price
Transparency
• Simple
• Clear
• Actionable
• Relevant
• Timely
7

8. How Consumers
Often Feel
Shopping for
Healthcare
"warehouse dump" by parkydoodles is licensed under CC BY-NC-SA 2.0
• Confused
• Overwhelmed
• Anxious
8

9. Sources: The Harris Poll, December 1, 2020; Kaiser Family Foundation, February 28, 2020; JAMA Network Open, November 16, 2018
The Cost of Confusion
Uncertainty
Anxiety
Avoidance
68% of Americans have gotten a surprise bill
2 out of 3 Americans worry about
unexpected medical bills
Confusion about costs and coverage leads
people to avoid care altogether
9

10. Source: The Health Care Consumer’s Manifesto
“I am just concerned that I’m going
to go to the doctor and I’m going to
have to pay a lot.” --Bella
Confusion and Fear of Costs Leads to Care Avoidance
10

11. 3. Have you ever tried to find the cost of a healthcare service before getting care?
• Yes – 73.04%
• No – 26.96%
4. If yes, did you find what you were looking for?
• Yes – 21.05%
• No – 78.95%
5. Have you ever compared prices across healthcare providers?
• Yes – 49.5%
• No – 50.5%
POLL QUESTIONS: Who has tried to find cost information?
11

12. Sources: Public Agenda. “Still Searching: How People Use Health Care Price Information in the United States.” April 6, 2017; Health Affairs, August 2017
According to Public Agenda “Still Searching” report:
• 50% of Americans have tried to find cost information before getting care
• 28% have tried to find out the costs of care at one provider
• 20% have compared prices across providers before getting care
• Consumers are looking to healthcare providers for cost information:
• 46% look to their doctor, 45% to the office staff, and 31% to the hospital
In a survey published in Health Affairs:
• 52% of patients were aware of cost before they got care
• 13% searched for the price, 10% compared prices across providers
Consumers Want Price Information…From Their
Healthcare Providers
12

13. Source: The Health Care Consumer’s Manifesto
“I can’t think of another situation
where you would sign up for a major
purchase without knowing [the
price].” --Art
Consumers Expect Price Transparency
13

14. Why Price Transparency Matters to Providers

15. Complexity
• So many services, codes, negotiated rates
Competitive concerns
• Disclosing proprietary terms
Anti-competitive concerns
• Economists fear transparency could lead to tacit collusion, price fixing
Sensitivity
• A Tylenol costs what?!?
Price Transparency is a Challenge…and Sensitive
15

16. Source: Kaiser Family Foundation, 2020 Employer Health Benefits Survey, October 8, 2020
Consumer expectations are rising as they pay a bigger share of total healthcare costs
• Consumers pay more out-of-pocket than ever before
• 83% of workers have a deductible, averaging $1,600+ ($2,000+ for 26% of workers)
• In 2010, only 70% had deductibles, averaging $917
• 65% of workers have coinsurance for hospital admissions, averaging 20%
Innovation will influence transparency
• Price transparency tools from private companies, payers, states
Regulations are forcing transparency
• No Surprises Act of 2020 holds consumers harmless from unanticipated out-of-
network medical bills
• Hospital price transparency regulations
Price Transparency Is No Longer Optional
16

17. Starting 1/1/2021, each hospital operating in the U.S. will be required to provide
clear, accessible pricing information online about the items and services they
provide in two ways:
1. As a comprehensive, machine-readable file with all items and services
2. In a display of shoppable services in a consumer-friendly format
This information will make it easier for consumers to shop and compare prices
across hospitals and estimate the cost of care before going to the hospital.
CMS Summary Hospital Price Transparency
17

18. Machine-Readable File
Single machine-readable, digital file
containing:
1. Gross charges
2. Discounted cash prices
3. Payer-specific negotiated charges
4. De-identified minimum and
maximum negotiated charges
Consumer-Friendly Display of Shoppable
Services, unless a Price Estimator Tool is
available.
Display of at least 300 “Shoppable Services”
that a health care consumer can schedule in
advance. (70 of which is CMS defined)
Must contain plain language descriptions of
services and group them with ancillary services,
proving the:
1. Discounted cash prices
2. Payer-specific negotiated charges
3. De-identified minimum and maximum
negotiated charges
Hospital Standard Charges MUST be Posted in Two Ways
18

19. Service is for the Inpatient Services at the Hospital
• Does not include any pre or post services.
• Post may include stay at SNF, Physical Therapy, Drugs.
Professional Services, Physician Components
• Does this only include the Surgeon?
• What about the Anesthesiologist, the Radiologist, the Pathologist?
Example of Price Estimator – MSDRG 470
19

20. The Missing Link: Price and Costs

21. Consumer Cost
• Amount of the Healthcare Provider
charges (or prices) that the patient will be
responsible for.
Hospital
Cost
• All the expenditures (cost) of providing
the services to the patient. The Provider
then constructs the charges (or prices) to
cover the cost of providing service.
The Price-Cost Disconnect
21

22. In the U.S., a
Hospital
Chargemaster, or
charge description
master (CDM) is
simply defined as
a comprehensive
list of items
billable to a
patient/insurance
provider.
Reality, much
more complicated,
alignment with
various regulations
– CPT/HCPCS
coding, ICD-10-
CM, ICD-10-PC,
etc. and Cost of
the Service
HOSPITAL
REIMBURSEMENT
is tied to this
coding structure
The Hospital Chargemaster
22

23. 6. Do you believe most healthcare providers understand their own operating cost at
a procedure/test level to construct a Chargemaster in accordance with billing
regulations?
• Yes – 12.5%
• No – 87.5%
7. How confident are YOU that you understand your own organization’s costs?
• Extremely confident – 10.11%
• Somewhat confident – 38.2%
• Not confident – 51.69%
POLL QUESTION: How Well Do Providers Understand Their
Costs?
23

24. How to Start Your Transparency Journey

25. Innovation
• Enhancements in clinical care
• Birth of electronic health records
• Electronic Data Warehouse, Data Data Data, and leveraging that data for insight
Regulation
• Changes in Medicare reimbursement, 1980s regulations shifting hospitals from
cost based to a prospective system (DRGs)
• Stark Laws
• Health Insurance Portability and Accountability Act
• Patient Protection and Affordable Care Act (Massachusetts Healthcare Reform)
Macro Trends
• Aging population
• Cost pressures
• Global public health concerns
Historical Changes Affecting Hospitals
25

26. Traditional costing is a SILO system of Departmental Cost to
Charge Ratios or Relative Value Unit
General
Ledger
Electronic
Medical
Record
Do Hospitals Understand Their Own COST?
26

27. Advance costing breaks the SILOS system, utilizes patient
activity and department cost to develop TRUE costing
General
Ledger
Electronic
Medical
Record
Do Hospitals Understand Their Own COST?
27

28. Understanding of
true cost
Identification of
best practices
Remove variation
means removing
waste
Better charge
alignment/
transparency
Market positioning
Improved risk
management/
Population Health
Benefits of Understanding of True Cost of Services
28

29. Would you like to be entered to win one of five copies of Deb Gordon’s book, The
Health Care Consumer’s Manifesto: How to Get the Most for Your Money?
• Yes
• No
POLL QUESTION #8
29

30. Would you like to learn more about Health Catalyst’s products and services?
• Yes
• No
POLL QUESTION #9
30

31. Questions?
Deb Gordon, Author, The Health Care Consumer’s Manifesto: How to
Get the Most for Your Money
deb@debgordon.com
Pat Rocap, Director, Cost Management Services, Health Catalyst
pat.rocap@healthcatalyst.com