As you’re probably already aware, the CMS hospital pricing transparency law is set to take effect on January 1, 2021. Is your healthcare system ready? Read on to see how Harris Affinity can help you prepare.
Starting January 1, 2021, all U.S. hospitals will be required to “provide clear, accessible pricing information online about the items and services they provide.” The hospital price transparency rule specifies that healthcare systems must provide:
- A comprehensive machine-readable file with all items and services
- A consumer-friendly format of ‘shoppable services’
What does CMS pricing transparency mean for you?
While the pricing transparency law is meant to provide consumers with an easy way to compare prices across hospitals and estimate their cost of care, it puts the burden on healthcare systems to ensure their websites are compliant by clearly outlining the cost of each service they provide.
Where should you start?
First, ensure you understand the basic requirements of the price transparency law. You can read more about it on the CMS website. Second, work with your organization’s leadership team to establish a project plan that includes identifying the resources necessary to support compliance. A key detail of the plan will be to calculate accurate and defensible prices as part of a competitive pricing strategy.
What is required to develop a competitive pricing strategy?
You will need to know the charge-level detail costs of providing services and aggregate them into each price item. Accomplishing this requires a costing process that incorporates multiple managerial accounting concepts. You need to know your costs in order to establish prices that will support positive financial results.
What are the actual costs of the services your facility is publishing for price transparency?
Understanding the total aggregated cost of published services involves knowing the utilization cost of items such as drugs and high-cost supplies. Harris Affinity’s Decision Support (ADS) suite of solutions helps you do just that by:
- Maintaining any number of cost models
- Grouping encounters across the continuum of care
- Building an unlimited number of cost components
- Blending cost methodologies
- Determining cost versus value of utilization to arrive at an “actual cost”
- Choosing how to allocate overhead expenses
- Supporting departmental hierarchies for multi-entity organizations
Best of all, ADS is versatile enough to use charge-based patient data or activity-based patient data in its reporting and analysis – the choice is yours.
Can you accurately and effectively report cost details at the service level?
Harris Affinity offers multiple solutions to help you accurately and effectively report cost details at the service levels through its Episodes of Care and Analytics modules.
ADS Episodes of Care module is an ideal resource for monitoring and managing CMS service reporting requirements such as the price transparency rule. Not only does it accurately link clinical and financial data, the intuitive interface produces reports that trace both patient and encounter levels of detail so that you can conduct a comprehensive financial analysis of costs across the continuum of care.
ADS Analytics provides a personalized analytics dashboard that allows you to effortlessly drill down into details with just one click to view:
- Physician alignment and peer comparability
- Service line analytics
- Profitability metrics
- Payer performance and comparison
How will you monitor and adjust reported prices?
Harris Affinity helps your hospital determine the true cost of care through quality data and analysis. Our comprehensive cost-accounting tool strengthens your cost development and monitoring activities by aggregating unit cost data so you can see the entire cost of product lines, populations, contracts and practitioner groups. You can then analyze the data to quickly isolate areas of cost variance, evaluate options for improvement and focus on monitoring changes and optimizing resources.
Not only does ADS provide you with the critical information to make sound financial decisions regarding your hospital’s internal operations, but you can use the same data to support external decisions, such as setting competitive prices to support your organization’s health margins.
The Bottom Line
Despite the risk of fines for non-compliance, many hospitals across the U.S. have not yet begun planning for the CMS price transparency rule and some have publicly declared their intention to simply pay the fines rather than having to comply with CMS requirements. However, this approach fails to contemplate the broader implications of this new regulation. The risk of lost market share and revenue, as well as the negative consumer reaction, that will result from failure to participate alongside of your competitors in an open market and the opportunity to gain a greater understanding of the financial underpinnings that drive your margins will have far greater impacts then simply complying or not complying with the requirements. It is in this greater context that ADS can help by giving you the tools that you need calculate accurate and defensible prices as part of a competitive pricing strategy.
While time is running out, the good news is that if you are currently using ADS, you already have the CMS price transparency tools you need to quickly obtain the cost information, which puts you ahead of the game! If you are not an ADS customer yet, it isn’t too late. We are here to support your success and we would be honored to have the opportunity to tell you more about how we can help.
Learn how Harris Affinity can help you prepare for price transparency; reach out to our team of advanced costing experts.