What are the top Price Priorities for Critical Access Hospitals?

What is Price Transparency?

On January 1, 2021, the Department of Health and Human Services (DHHS) implemented price transparency legislation for all licensed hospitals in the United States that are not federally owned or operated. This ruling was initially published on November 27, 2019. For the first time, a hospital’s negotiated rates for services are exposed, allowing patients, competitors, and payers to compare price and shop for services.

Four Key Areas Critical Access Hospitals (CAHs) Must Prioritize

CAHs must ensure that the decisions they make will keep their facilities on the right road financially. This road is made up of four interconnected lanes:

  • CDM Price
  • Cost Reporting
  • Payer Contracting, and
  • Price Transparency Shoppable Services

Stroudwater recommends that hospitals evaluate each of these key areas and identify and address any issues as soon as possible to guarantee price transparency compliance. Below are the key areas, with important steps to take and relevant questions to ask during this process:

Charge Description Master (CDM) Price

  • Develop a defensible price strategy
    • Does your hospital have a strategy established for price?
    • Is this strategy defensible?
  • Complete a full chargemaster review
    • When was the last time your entire hospital chargemaster was reviewed?
    • Is price consistent? Are there instances where you find the same CPT/HCPCS in different departments with multiple prices?
    • Does your chargemaster include codes that have been deleted by the AMA or are no longer considered appropriate for Medicare and CMS reimbursement?
  • Perform ongoing CDM maintenance
    • Have you established policies and procedures for ongoing CDM maintenance that engages both operations and revenue cycle?

Cost Reporting

  • Evaluate Ratio of Cost to Charges (RCC)
    • Changes in charges will impact hospital RCC, which can affect short-term cash flow negatively or positively and require a longer timeline for accurate reimbursement.
  • Complete interim cost modeling
    • If you are changing your prices, have you done accurate interim cost modeling?
    • Have you calculated projected cost-based rates and department RCCs, and submitted them to the Medicare Audit Contractor to receive new, more accurate rates?
    • Proactively submit rate changes to Medicare Advantage Plans to avoid lost revenue and receive updated payments sooner.

Payer Contracting

  • Review Contracts
    • When was the last time you reviewed the details of your payer contracts, including the reimbursement schedules, the appendices, etc.?
    • Increases to gross charges do not always fall to the bottom line. Be sure to do modeling by payer to project the impact of the chargemaster price changes.
    • Payer contracts may contain reimbursement methodology language, such as excluded services that should not be priced for that payer or changes in charges that could trigger “lesser of” clauses in payer contracts.
  • Renegotiate Existing Contract
    • Voluntarily reduce overall charges to get a higher percentage of charge reimbursement.

Price Transparency Shoppable Services

  • Perform annual maintenance of price transparency reporting as required by CMS
    • Complete a charge and reimbursement rate review
    • Were there changes in standard charges or negotiated rates?
    • Are there any new or revised ancillary services?
    • Revise the 300 Shoppable Services
      • Which new services were added?
      • Which old services were deleted?
      • Do you have a marketing strategy established for your location that capitalizes on the published services?

What Hospitals Must Include on their Website for Price Transparency

The new rule aims to make it easier for consumers to find and compare costs at different hospitals before receiving treatment. Requirements include:

  • Price information must be posted on a publicly available website in a prominent manner
  • The information must be digitally searchable, free, and accessible without having to register, create an account or submit personally identifiable information (PII)
  • Standard charges must be published on the hospital’s website in two formats: Shoppable Services and Complete CDM

If your hospital is struggling to comply with the price transparency requirements, we can help. Learn more about Stroudwater’s price transparency services.