In the wake of new price transparency regulations proposed by The Centers for Medicare and Medicare Services (CMS), hospitals are left to figure out how to comply with regulations while ensuring their services are priced competitively without sacrificing quality of care. According to the CMS, the prospective rule proposes price transparency requirements that will increase competition among all hospitals by requiring them to make pricing information publicly available. As a result, patients would be able to shop for healthcare that meets their needs and budgets.
The new price transparency regulations would require hospitals to publish both gross and payer-negotiated charges for “all items and services.”
So, what can hospitals do to begin preparing for when the proposed regulations take effect? As health systems like UCHealth (Co.), Monongahela Valley Hospital (Pa.), and Memorial Health System in Hollywood, Florida continue to develop and launch price transparency tools, we believe the most important impact can come from the quality of the Charge Description Master (CDM).2 With an accurate CDM to reflect hospital costs, hospitals will be able to accurately quote procedures for their patients.
Here are three easy and effective steps to help your hospital prepare for consumer price transparency.
- Know your Data
From Daraprim to saline, hospitals need to know and document quantities and costs on every bit of inventory. With more accurate documentation in your facility’s Charge Description Master (CDM), the more accurate you can price out procedures for patients.
- Define Your Process
Do you know who is in charge of your CDM? We suggest you, first, determine which department will manage your facility’s CDM. Once you know who owns the CDM, a thorough process should be developed, documented, and implemented to track and manage all CDM updates and audits. This process should include a step for documentation in a log to keep track of the individuals reviewing and updating the CDM regularly. It’s likely that more than one department does contribute updates to the CDM. Pharmacy may be responsible for sending the acquisition price to the billing department, and the billing department updates the CDM accordingly. With a well-defined CDM process in place, the managing department can better ensure for a more accurate and up-to-date CDM.
- Regularly Audit
“We recommend performing a full CDM audit on a quarterly basis,” said Justin Sotomayor, Pharm. D., Director of Pharmacy Informatics for CompleteRx. This allows you to ensure the inventory and pricing accurately reflects in the CDM. Understanding your costs also allows a clearer picture of your bottom line. “When you know what your costs are you invite the opportunity to renegotiate rates and improve your bottom line,” Sotomayor said.
As the CMS moves to enforce stricter price transparency regulations, hospitals should focus their early 2020 goals on the CDM clean-up. Seema Verma, CMS Administrator said, “The agency is not done pushing policies aimed at giving patients greater access to information about the cost of their care.” The ability to provide patients with accurate pricing depends on the accuracy of the hospital’s own costs, which begins with an accurate CDM.