Hospital Pricing Strategies & Services

Hospital pricing methodologies that are transparent and defensible are crucial to patients, payers and the overall healthcare market in the current environment. For improving financial performance, all prices should be consistent, rational and easily explained to the public. In addition, prices should be designed to protect the hospital’s net revenue by not being below governmental fee schedule rates.

CMS Price Transparency Requirements

As most hospital leaders know, the new CMS Price Transparency Final Rule requires hospitals to post their “standard charges” online. As of January 1, 2021, standard charges, as defined by CMS, include:

  • Gross charges
  • Discounted cash prices
  • Payer-specific negotiated charges
  • De-identified minimum negotiated charges
  • De-identified maximum negotiated charges

The rule also mandates publishing pricing information for 500 “shoppable services.”

This rule means that hospitals must prove the five different fields of “standard charges” for every chargemaster item for each payer and for each payer’s various plans. Preparation can be time-consuming and stressful considering community hospital staff is stretched thin. Those that fail to publish all the standard charges online could be fined up to $300 a day.

Benefits

  • Meets regulations. Staying current on CMS pricing requirements prevents fines and keeps hospitals in compliance.
  • Detailed. Evaluation of current prices identifies discrepancies such as inconsistency in items with the same CPT code or more complex procedures priced lower than related simple procedures.
  • Competitive. Checking current prices of identified market competitors by service line and individual CPT code ensures a hospital is on par with peer hospitals. Comparison of current prices to the Medicare fee schedule provides baseline pricing.
  • Strategic. A careful evaluation and timely review create a rational and defensible pricing strategy.

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Four Tips to Prepare for CMS Price Transparency Final Rule

Final Rule Challenged in Court, but Hospitals Should Still Prepare

As most hospital leaders know, the new CMS Price Transparency Final Rule requiring hospitals to disclose the rates they negotiate with insurers has been challenged in court. Four hospital associations and three independent hospitals are suing Health and Human Services (HSS), which oversees CMS, over the Final Rule’s statutory basis. As the case wends its way through the legal system, hospitals are advised to go ahead with preparations for complying with the rule, which is set to take effect Jan....

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