Hospitals Roll Out Online Price Estimators as CMS Presses for Transparency

June 26, 2018

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Source: Modern Healthcare

Leaders at El Camino Hospital, located in California’s Silicon Valley, wanted to make it easy for tech-savvy consumers to shop online for personalized, reliable price estimates for its medical services.

The independent not-for-profit hospital launched a consumer self-service tool in May 2017, after about a year of development work with Experian Health, which previously helped El Camino set up an internal price-estimator tool for its billing staff.

Since then, more than 3,000 people have visited the hospital’s website, selected one or more of about 90 medical or surgical services they were interested in, entered their insurance information, and received an instant out-of-pocket cost estimate the hospital claims is 95% to 99% accurate.

Over the past two years, a growing number of hospitals have worked with vendors such as Experian and Recondo to offer online price estimates directly to consumers for common, less complex services. Previous tools allowed hospital staff to generate estimates for patients when they called or came in for a service.

Now, more providers want to offer self-service cost estimators on their websites. That’s because they’re experiencing strong demand from patients in high-deductible health plans who want to shop around and know their financial exposure in advance. When patients understand how much they’ll owe, that can improve the collection process and reduce uncompensated care, hospital leaders say.

“A lot of people don’t have time to make phone calls or wait for a callback, they want an answer right away,” said Terri Manifesto, El Camino’s senior director of revenue cycle. “They expect this kind of information online. It’s a great thing to offer patients.”

The hospital spends about $18,000 a year to provide the service, which currently offers estimates for 35 lab tests, 25 imaging or radiological procedures and about 30 surgical or other medical services.

Providers face mounting pressure from regulators and consumers to be transparent about costs, especially given increasing public anger about unexpected large bills. The CMS recently proposed a rule requiring hospitals to publish online a list of their standard charges in a machine-readable format and update the information at least once a year.

Still, experts note there are limits to the types of services for which consumers are able to price-shop. There is a risk they can get confused about more complex services and blame providers for underestimating the final cost. Vendors are still working on improving the reliability of the estimates, particularly for surgical procedures involving more cost variables.

Up to now, many hospital leaders have contended that insurers are better equipped to tell patients what they’ll owe for particular services, claiming there’s no infrastructure in place giving providers access to the necessary information. But that argument may be losing credibility as more hospitals partner with vendors to offer patients out-of-pocket cost estimates.

“There are enough examples now that show if providers want to offer better information to consumers, they can build the capacity to do it,” said Suzanne Delbanco, executive director of Catalyst for Payment Reform, which monitors healthcare transparency efforts. “It clearly can be done, and symbolically it’s the right thing for providers to do.”

Online patient price-estimator tools for hospitals and healthcare providers represent a growing market for vendors. “This is an absolute area of interest based on regulation, high-deductible plans and increased patient responsibility for bills,” said John Yount, vice president of healthcare solutions at TransUnion, which hopes to have a patient self-service tool on the market by the end of this year.

Franklin, Tenn.-based Experian, which offered its first price-estimator tool for hospitals’ internal use in 2008, now has about 10 customers—including hospitals, physician groups, and outpatient and imaging centers—that have gone live with the company’s online tool for consumers. It tested the product at St. Clair Hospital in Pittsburgh, which in 2016 became the first hospital to offer it to patients.

Experian’s product calculates patients’ out-of-pocket cost based on the hospital’s chargemaster price, its claims history for providing that service, its contract terms with the patient’s insurer, and the patient’s benefit structure and deductible status. It also estimates out-of-pocket costs for self-pay patients. The estimate currently covers just the facility fee, though El Camino wants to add professional fees into calculations available through the tool.

In addition to having the option of including facility fees alone in the estimate or including professional fees, providers have the option to present only the patient’s out-of-pocket cost, or they can also disclose their actual charges and insurance payment rates. Vendors say providers in more competitive markets typically choose to display only the patient’s out-of-pocket responsibility to avoid letting rivals see proprietary rate information.

“Offering an online price estimator is a marketing advantage for hospitals and medical groups that want to be transparent with patients,” said Merideth Wilson, a senior vice president at Experian, which charges clients a one-time implementation fee and a monthly maintenance fee based on patient visit volume. “Our customers say it helps with consumer satisfaction, bringing patients back, and bringing more patients in.”

Denver-based Recondo released its online cost estimator, called MySurePayHealth, three years ago, and now has about a dozen hospital systems, including Baylor Scott & White Health and ProMedica, using it. The accuracy of its estimates ranges from 75% to nearly 90%, depending on the complexity of the medical or surgical service, said Heather Kawamoto, vice president of products for Recondo, which charges clients a monthly subscription fee based on patient visit volume.

Some Recondo hospital clients, particularly those that own sizable physician practices, include professional fees in the estimate, which makes it much more useful to patients, she said. The tool also asks users if they want a hospital financial counselor to call to discuss a possible loan or charity-care arrangement.

“If the patient has concerns about ability to pay, our clients want to proactively engage in that conversation and put the patient in the best position to pay for that care,” Kawamoto said.

 

Quality indicators absent

These price-estimator tools currently do not offer any type of quality of care, outcomes, or patient satisfaction information to allow consumers to factor those into their shopping decision, though El Camino officials say they hope to build that in.

Delbanco said the lack of quality data is one problem with these tools. Another is that the estimate consumers receive may not reflect the full cost of the care because the professional fees are missing and an episode of care may include unanticipated additional services. A hospital’s online price estimator “is not the optimal choice for consumers but it’s certainly better than nothing,” she said.

El Camino’s Manifesto is trying to figure out whether offering the online cost estimator has boosted her hospital’s revenue. “We’re pretty excited that more than 3,000 consumers ran price estimates in one year’s time,” she said. “Now it would be great to know if they actually came in for services.”

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