Financially Informed Health Care Decisions Require More Than An Executive Order

By Paul Shorrosh

President Trump recently announced a new executive order to improve health care price transparency, and hospitals across the country will feel its impact. The order marks meaningful progress beyond the HHS rule from earlier this year that simply required hospitals to post retail chargemasters to their websites. However, it’s only a first step. Meaningful and clear rulemaking from HHS on what the order means in practice will determine whether patients truly get the information they need to make a financially informed health care decision.

I’m an optimist at heart so the prospect of putting more actionable information in patients’ hands is a step in the right direction. I’ve spent the past 15 years building a market-leading healthcare revenue cycle software company so I know how complex it is to provide patients with an accurate estimate of their actual financial responsibility. 

So, what will hospitals need to do to prepare for what is likely to come from HHS?

Let’s start with patients who have health insurance. Hospitals contract with dozens, and sometimes hundreds of “payers,” including commercial health insurance companies, the government, and large, self-insured companies. Each of those contracts is unique, with different prices for each of the thousands of services the hospital provides. Under the new executive order, hospitals must make those contracted prices visible to patients. To comply, each hospital will have to develop a way for patients to view the prices associated with their insurer — prices that can change yearly or even quarterly. 

That is complex enough; unfortunately, it is the easy part. In order to deliver real price transparency, hospitals will ultimately need to answer the patient’s question, “how much will I owe?” To do this, they must factor in deductibles and co-insurance, accounting for any payments payers have made so far in the plan year, which can change in real-time, and varying deductible levels for different services. Then there are additional charges, such as facility fees, supplies, and payments to additional care team members who may have fees (e.g. anesthesiologists). Once you have all the above information, you can finally “do the math” to inform the patient of their out-of-pocket cost for a particular service. 

For a self-pay patient — someone who doesn’t have insurance — hospitals will have to maintain separate pricing based on the discounts they give to such patients, and those discounts vary based on income levels. The calculation is a bit simpler in this case, but it represents another scenario that will have to be managed. 

Providing accurate cost estimates is the absolute right thing to do for patients and if this information is available at each hospital, patients will truly be empowered consumers. 

I’m optimistic this initiative will allow market forces to drive down prices, but experience reminds me how difficult it will be for some hospitals to make accurate price information available. Fortunately, many have been hard at work on how to use data, technology and now, artificial intelligence to help make this as easy as shopping online for an airline ticket. Leading hospitals recognize price transparency is not only the right thing to do, but also is a competitive advantage. They will remain ahead of the competition and will draw more patients than competitors who are slower to adapt.

Even without HHS rules, empowering consumers to make better decisions about the health care services they use through price transparency is essential and is already possible. However they decide to confront this issue, all hospitals should be proactive in moving toward greater price transparency. The time is now. 

Paul Shorrosh is the CEO and founder of AccuReg, a front-end revenue cycle intelligence company. This month AccuReg launched Estimate My Cost™, a self-service, online tool for estimating patient health care costs.