Transparency

Foundation for Growth

Invest in fundamentals and growth to move forward

Scarcity mindset is toxic to you and companies. It is a result of something lacking in your life that causes you to do things for short term relief rather than taking actions that provide long term benefit.

I had several exchanges with colleagues recently and scarcity mindset came up in every exchange whether the topic was foreign investment or potential business partners taking information for their own gain. When people feel their job or survival is threatened they tend to protect their turf with short sited decisions.

It’s hard to make any meaningful progress in business when people are protecting their turf because it limits their ability to think creatively and resourcefully. People need a certain level of support to shift their mindset to growth. It’s why leading edge companies provide employees with continual learning opportunities and benefits that support health and wellbeing.

Processes will be automated and jobs will be eliminated. As leaders we need to be thinking ahead, making investments in people and supporting their transition in the workforce. There is always something better when people can imagine their role in a brighter future.

Reframing mistakes, screw ups and failure all have a seemingly negative impact but they are not all the same and shouldn’t be treated the same way.

Screw Ups are just simple mistakes that happen even though you normally get whatever it is right. Don’t beat yourself up over a screw up. Just make amends and move on.

Failure is a necessary part of growth. If you try something new and it doesn’t work as expected, don’t get caught up in negative self talk. Grow from the experience and achieve something even better.

Representation matters. You might not agree with what was done in the past but when you see opportunity, you can change the future.

A few years ago, colleagues questioned my decision to work with a certain client. Admittedly, that client operated with business practices that were definitely questionable in terms of ethics, but that were not illegal. I had even struggled with the decision at the time because the practices didn’t fit with my own moral code of conduct and later wondered if I made a mistake.

However, watching the interview with Bozoma Saint John, Chief Brand Officer for Uber her words confirmed for me that I made the right decision. Accepting the client didn’t mean that I condoned their past business practices. Rather I saw the opportunity at the time to move the client forward in a way that created a win for everyone.

Some health plans have been developing narrow networks that are economically credentialing some providers out of their networks for past behaviors. Unfortunately, no one really wins with that strategy because patients value choice and penalizing providers usually forces more consolidation which drives up the cost of healthcare.

No one can change the past. We have to look for the opportunities to correct past wrongs and move forward in a way that serves everyone’s best interests.

You don’t have to cheat to win. Healthcare is a tough business but investments in the fundamentals pay off over time and ready your organization for the future.

1. Market Assessment: Assess your value to the patient population you serve in terms of the 3 P’s of marketing: product [your service], place and price.

2. Invest in your People: Too often healthcare companies only provide required training to professionals. They forget that every single person within the organization affects the overall patient experience. Leading edge companies that routinely invest in their people perform 45% better than their competitors.

3. Automate all Routine Processing: Streamlining and automating processes increases accuracy, increases cash flow and enhances the experience for healthcare consumers [patients] by giving them more control. Training investments make it easier for people to transition up or out of the organization when the time comes.

4. Manage your Contracts: Use data from your market assessment to negotiate ‘fair value” rates with commercial payers and mange those contracts. 3–5% annual increases may not seem like much but when you compound it over time, it adds up.

Laying the foundation takes some upfront work and investment but the pay off is long term financial success.

More change ahead is likely as patients demand more transparency and become sophisticated healthcare consumers.

Reference pricing offers way to engage healthcare consumers that allows for more choice and full access to providers. What is it?

The allowed amount for a specific service is limited to a defined contribution or in other words, a flat amount for a specific service. If a more expensive provider is chosen, the employee/patient has to pay the difference. The employee receives the full benefit when treated by low cost providers.

A reference price gives employees/patients more control over the entire experience in terms of their providers [facility and physicians], setting, implants, drugs etc. which is what most people want. The challenge is the lack of pricing transparency.

The prices available to most patients now are estimates based on historical claims data. The data fails to reflect real time market changes resulting from consolidation, new contracts and new technology or services. The only way to get accurate prices is from the providers involved and the health plan contracts with those providers.

We have standard transaction sets for authorization and claims submission but for some reason we’re not using them to facilitate estimates. The question is why not? Current revenue cycle costs exceed $52 Billion annually and do little to serve the healthcare consumer.

Collection Risk is a real problem for healthcare providers especially when patients are underinsured. Who should pay for the collection risk?

Policy benefits are assigned to the provider when care is provided. Assignment of benefit was meant to protect the provider from patients who fail to remit insurance payments made for their care.

The problem now is that providers may or may not get paid even when they have been assigned the benefits. In many cases, the first dollars under many policies are now due from the patient not the commercial payer.

There are new solutions to help providers collect from patients but it’s adding more time and effort to the process. Many small retailers cringe at the thought of a credit card transaction fee which is a drop in the bucket compared to the cost of collection in healthcare. Even with the new tools and increased effort, collection risk is increasing because patients don’t have the money to pay or just don’t pay.

Should insurers selling the policies and/or companies providing the policies be required to reinsure the underinsured? Technology being used to help people select policies can probably also predict the reinsurance need. So should premium dollars be set aside to cover the collection risk?

Gravity Problems: Watching “ObamaCare” twist in the political winds has not been easy especially for those directly impacted by the changes.

I have started reading a new book called Designing your Life. It breaks life down into 4 aspects: Work, Play, Love and Health and uses a metering like system to help you evaluate what areas are working and what areas need improvement. I like the simplicity of the framework.

One idea that has stuck with me is “gravity problems” and the fact that you can’t change gravity. You have to work with gravity or work around it to achieve whatever it is that you want. Gravity problems can be environmental, circumstance related or even political.

So tackle the problems that you can solve, change your tact on some and prepare for others that are likely in the future.

Innovation: Companies that want to innovate and perform better need to accept that failure is part of the process. The learnings are as valuable as the result if you allow people to harness the insights into doing or creating something better.

Not everyone is prepared or willing to take on the risk to chart a new path or create a new product. So people willing to take the risk should be rewarded not punished when they fail especially when they can explain and act on their learnings.

Innovation is about experiments. The very nature of experiment is about trial and error. The concept of innovation gets lost when people make huge bets that don’t pan out. Don’t make a huge bet until you know what works.

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About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success. She is also the founder and CEO of Hello Workout.

Join us on Hello Workout for help covering the weekly minimum requirements for good health, telehealth appointments with Sports Medicine experts and other tips to help you achieve more success in work and life.

Save on Healthcare

Shopping for healthcare takes a little research and know how but there is real money to be saved.

No one likes to pay more than they have to for anything.

Did you know you can buy car parts on Amazon? I didn’t until someone broke one of my tail lights and it looked like an easy DIY [Do It Yourself] project. I was able to find the exact part and as a Prime member got it shipped to me FREE. It was so easy that I couldn’t help but do a little more shopping.

Why am I telling you about shopping for car parts?

No one ever pegged me as someone who would buy car parts or attempt a DIY project on my car. Like many people, I have a trusted relationship with my mechanic and whatever repairs he recommends, I approve and pay him to do.

Similarly many Americans put their full trust in their doctors and approve their recommendations regardless of cost. However, that could change. My DIY project wasn’t as easy as it looked on YouTube. After breaking 3 finger nails and 2 screw drivers, I gave up and made an appointment with my mechanic. While there I decided to have a few more minor repairs done. This time I was speechless when I saw the quote. My mechanic quoted me 4 times [4x] the cost for the parts. How do I know? I remembered seeing the parts on Amazon.

A 4x markup is comparable to the markup routinely charged on high dollar supplies and implants in healthcare. The difference is healthcare consumers only pay a small portion of the marked up cost after the insurance discount and payment. I didn’t say anything to my mechanic at the time, but it made me realize that pricing transparency is a game changer.

Amazon for healthcare

Amazon has already announced plans to start selling prescription drugs. It’s going to take some work before they are ready to fill their first prescription but when they do, it could be a big cost saver for many Americans. There is currently no way to compare the cost of drugs at different pharmacies or covered by different health plans. Amazon could make it as easy as shopping for car parts by providing a marketplace for pharmaceutical companies.

Amazon already sells medical supplies.

Imagine how surprised my mechanic was when I drove into his garage with a trunk filled with parts. I had also purchased new lenses and seals to replace my cloudy headlight covers and was surprised when my mechanic refused to do the work. What I didn’t understand when purchasing the lenses was that changing only the lens would impair the integrity of the light and cause bigger problems later. He recommended a body shop if I absolutely wanted to do it. His refusal to do the repair requested may have been upsetting for some, but for me it spoke to his integrity as a trusted advisor. I returned the lenses and seals.

Can you see that scenario playing out if healthcare consumers start buying their own supplies and implants? Using the Amazon filters to narrow the options that are right for your make and model of car is easy enough but the process is still lacking the intelligence and judgement that you get from a highly trained professional. Let’s try not to imagine a medical DIY project guided by a YouTube video for now.

Amazon-like services available now

Pharmacy:

There are online pharmacies available now. If you do plan to purchase your prescription drugs make sure you buy from one of the Verified Internet Pharmacy Practice Sites [VIPPS] otherwise you might not get a quality drug. To save money now, talk with your doctors about generics and bio-similar drugs that can save you money and ensure you get the right medication. You may also be able to qualify for patient assistance from a pharmaceutical company.

Healthcare Services:

There are also web-sites that can give you “fair prices” for healthcare services including surgery. Fair prices are generated from historical claims data collected from participating companies, providers and payers.

Healthcare Bluebook is one of the sites available to consumers FREE and a good place to start your shopping. If you use the site, be sure to enter your Zip Code to get the prices for healthcare services offered near you and click on the Details to learn what’s included in the price. For surgery, the fair price on Healthcare Bluebook includes the fees for the facility [hospital or Ambulatory Surgery Center], surgeon and anesthesiologist plus all the supplies and implants. When the fees of different service providers are included in one price, it’s referred to as a bundle.

If you call a hospital or an ASC for a quote, ask them for a bundled price too. Chances are they have one that could save you money and make it easier for you to get your arms around the total cost and the billing.

Labs:

You can also order many of your own lab tests through HealthcheckUSA.com or Quest Diagnostics to check your cholesterol, diabetes, colon cancer, prostate etc. without a physician order. The rates are comparable to cash rates which are often significantly less than the full price because the labs get their money from you at time of service.

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About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success. She is also the founder and CEO of Hello Workout.

Join us on Hello Workout for help covering the weekly minimum requirements for good health, advice from professionals and other tips to help you achieve more success in work and life.

 

 

 

TrumpCare?

Success of TrumpCare depends largely on whether or not Americans have sufficient disposable income to purchase enough insurance and needed healthcare.

As many of you know, the healthcare industry is going through more changes. Americans like the parts of ObamaCare that gave them more protections for pre-existing conditions and extended coverage for their adult children. What they didn’t like was the cost of comprehensive coverage. Some Americans paid more for richer benefits that they may or may not have needed, while others benefitted from subsidized insurance that enabled them to get needed healthcare. Unfortunately, repealing ObamaCare also means repealing the subsidies that were largely funded with new tax dollars [3.8% investment tax] levied on wealthy Americans.

Going forward cost and coverage are the two variables that you need to keep in mind when choosing health insurance. More insurance options that trade off coverage for a lower cost are likely under TrumpCare. Less healthcare coverage is not bad but Americans will need to read the fine print closely to understand what they are buying. In choosing a policy, everyone will need to consider their savings, disposable income and health status.

If you’ve never had health issues, it might be hard to imagine scenarios when you would need healthcare insurance. It’s like purchasing a new car. You don’t expect repair bills beyond scheduled maintenance unless you have an accident. Unfortunately, accidents do happen. Imagine catching your pointy toe shoe in your pant leg and doing a high diving off the curb onto the street. Speaking from experience, there is a good chance that you’ll crack and/or break a bone or two. One accident like that can get you well on your way to meeting your Out-of-Pocket Maximum for the year. As you would expect, the repair bills for your car become more frequent and get bigger each year – same with your healthcare costs. Brand [genetics], mileage [lifestyle] and adherence to scheduled maintenance [check ups] affect the total cost of the annual repair bills.

You will also likely be paying more out-of-pocket for healthcare. To help you pay for health insurance, TrumpCare will likely provide tax credits for health insurance purchased rather than subsidies and help you save for qualified medical expenses by increasing the annual saving limit for healthcare savings accounts [HSA] so that you can save more tax free. To help Americans spend wisely, the cost of healthcare services are becoming more transparent and the billing easier for the average consumer to understand.

Some Americans value paying more for the peace of mind of having richer benefits or what some think of as “prepaid healthcare” while others skimp on coverage choosing a high deductible or catastrophic policy and pay more out of pocket. Whatever you choose to buy is fine as long as it gives you enough insurance coverage. Just don’t buy the cheapest insurance policy and expect it to cover everything. If you do, you might want to sharpen your “Go Fund Me” campaign skills.

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About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success. She is also the founder and CEO of Hello Workout.

Join us on Hello Workout for help covering the weekly minimum requirements for good health, advice from professionals and other tips to help you achieve more success in work and life.

Keep it Simple

Einstein was famously quoted saying “Make everything as simple as possible…”.

Keep it Simple may sound like common sense for some however, making a product or process simple takes a lot of work.  For large companies it is the latest transformative concept being used to recruit and retain good employees. Technology is now enabling large companies to offer employees more control over their work life. How you ask? It starts by giving people more flexibility over when and where they work. For instance:

Virtual office environments and collaboration tools are enabling people to work from where they feel most comfortable whether it’s at home, in a coffee shop or at the office. Large employers are realizing that people don’t need to be in the same physical location or even in an office to collaborate effectively and that employees are more productive when they can choose where they work.

Employee portals provide access to information and people on demand and now guide employees through essential processes so that they get the right information tailored to them at the right time. Employees can complete their on boarding paperwork, quickly build their internal network by connecting with coworkers, managers and other colleagues, find courses and training programs and manage their benefits from one place. 

Sounds good but like with all technology the effectiveness depends largely on how it is implemented and embraced by the organization. For example virtual offices can be plagued by the same types of biases as physical offices if the focus is still on presence [people logged in] rather than performance.

Transparency is a key ingredient for an initiative like Keep It Simple to be truly transformative.  Companies need to be transparent about the things that matter most to employees like pay and performance measures.

Compensation: Pay is still a problem for most companies largely because salary history is still a function of the compensation formula or at least a benchmark used to set future pay. What people were paid in the past or at another company has nothing to do with the value of their contribution in a new role.  Replacing salary history with a base pay for everyone would eliminate past inequities especially for women and minorities and properly value the work being done.

Performance measures: Job descriptions rarely make the priorities of a job clear. Often they contain a long list of duties but rarely spell out how success on the job will be measured. Think about it….what is the elevator pitch for your job?  If you can’t articulate what you do, your job description is likely too vague and it’s time for a chat with your manager. If you have a pitch, try it out on your manager. It’s probably the fastest way to find out whether you’re in sync or if there is a gap in understanding that needs to be closed.

We all have lists of things that we’d like to do and then there are things that we have to do whether we like it or not. If we want people to focus on things that they have to do for the company to succeed, the nice to dos have to eliminated from the job description. In fact it may be time to replace “job descriptions” with job summaries that highlight the top 3-5 responsibilities and personal qualities needed to succeed in the role. Make them real so that employees can see into the job [be transparent about a day in the life] and decide whether it’s right for them now or not.

About the Author: Shannon Smith is a strategist with over fifteen years of experience helping companies achieve greater success.

The Benefit Gap

Purchasing health insurance is kind of like purchasing a specialty light bulb. There are more bulb options than you can ever imagine. Standing in front of the wall of bulbs once you’re at the store, you’ve probably realized that it’s next to impossible to pick the right bulb without knowing the model and wattage needed.

If you’ve used an exchange or picked your insurance from a bunch of policy summarizes, you probably felt that same overwhelming feeling as standing in front of the wall of bulb options and likely thought there has to be a better way.

Exchange and Brokers:
Exchanges and brokers narrow the options so that you only have to look at part of the wall. The problem is that the criteria used to narrow the options basically tell you which policies you can afford but not necessarily which plans are best for you.

Income, age and location are the primary criteria being used to filter the options on the exchanges. Age is a risk adjustment to help insurers price the policies, income addresses your ability to pay for health insurance and location provides all of insurance policies offered in your city. In other words, it’s like seeing only the bulbs that you can afford to buy but they may or may not fit your light.

Healthcare Jargon:
Model numbers and wattage don’t help if you don’t the model and wattage needed. Similarly, the use of healthcare acronyms don’t help you pick a policy when you don’t understand what the acronyms mean.

Exchanges and policy summarizes are littered with healthcare acronyms such as HSA, PPO, HMO and EPA. Some of the acronyms have been around for a while but how they are being used is changing and evolving within the healthcare industry and those newly covered probably don’t have a clue what they mean. The problem is that all of the acronyms affect the cost of healthcare and impact the consumer experience.

Comparable Plans: 
How do you pick a bulb when you don’t know the model and wattage? Chances are you guess. You pick the new bulb from your memory of the old bulb and take it home to try it out. That’s kind of what people do when picking health insurance. They use past experience to find a policy like their old one or a better one if the last one didn’t meet their needs. 

However, the only thing comparable about the plans now are the names and the benefit terms included. Some benefit terms specify a copay or rate of coinsurance and others set a maximum benefit. Consequently, there is no mathematical way to know which term provides the better benefit.

Few people are able to figure out which benefit is better because it takes a lot of work just to get the information needed to do it. So most people guess and hope for the best. Needless to say, emotions flare when they figure out their guess was not so great because unlike a light bulb, they’re stuck with the policy for an entire year.

To provide the math at time of purchase, more information is needed about each insurer’s network. Most insurers have to contract with healthcare providers (physicians, hospitals and others) for services needed by their members. The contracted rates are negotiated and may be different from provider to provider.  For healthcare providers not included in the network, the provider’s charges are needed to calculate the benefit.

The Point:
Healthcare consumerism starts with the selection and purchase of the insurance policy not healthcare services. If consumers don’t purchase the right policy for them, there is friction every time they use their benefits.  

With healthcare costs becoming a bigger part of the consumer budget, we need to make it easy for healthcare consumers to understand what they are purchasing and make better recommendations of policies to serve their needs.

About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success.

Connecting Dots

Is there such a thing as too much when you’re sick…too much knowledge, too much care or too much money?

I recently read an article written by Lisa Rosenbaum, MD in the New Yorker called The Problem with Knowing How Much Your Health Care Costs.  She used her own experience of delaying medical treatment as an example of how cost can impact a patient’s decision to seek care.  The examples used that reportedly affected her decision seemed like exceptions rather than the norm in healthcare finance, but the issue she highlighted is real.  Cost information may deter some people from seeking care especially in the absence of reliable information.

Providing an estimated cost in advance of care to patients is nothing new to me and something that I have been working with facilities to do for more than 10 years.  It is not as easy as some may think for complex services such as broken bones because there is usually more than one provider involved.  In the case of some Emergency Room (ER) services, the issue is even more complex because of the nature of the service.  However, given my own ER experience the issues seem to point to a bigger issue than cost alone.

Too Much Knowledge
Like Lisa, I was lucky to have had health insurance and a healthcare savings account when I experienced stomach pain so severe that I ended up in the emergency room.  I knew something was really wrong as I left a lunch meeting because I recognized the pain.  Something had ruptured – but what?  I called my mom who was a nurse and knows my medical history better than anyone to ask whether or not to go directly to an ER.

Cost weighed on my mind in the moment but there was something else too.  In the industry, we often talk about the high cost of care in ERs and how much of that care can be delivered in lower cost settings.  It was the second part of that statement that left me wondering whether my condition was serious enough to warrant an ER visit.  After conferring with my mom, I went home to see if the pain would pass.

Both Lisa and I attempted to triage our care in a similar way which makes me wonder… how does an average American decide whether or not to use an ER when they are sick or in pain?  Does everyone try to triage their own care or should there be some more formalized way to help triage care?

Too Much Care
By the time, I got home it was clear that the pain wasn’t going to pass.  A friend took me to the closest ER and stayed with me through all of the testing.  I’ll spare you all the details but there was one notable difference from the process used to diagnose my appendicitis.  My care this time started with something my physician described as one of the meanest things they do to patients followed by a CT scan rather than a physical exam.  When the images didn’t reveal the problem, the physician did a physical exam which revealed the location of the pain and a probable diagnosis.

The next day, I saw a specialist who did a physical exam and then ordered an ultrasound.  Something had ruptured but fortunately, nothing that needed further medical treatment.  While it was good news especially in light of the initial diagnosis, the whole experience was still upsetting.  During the ultrasound the technician mentioned that she was on call for the ER but wasn’t called.

I couldn’t help but wonder whether the ER visit was all for not.  Could the ER physician saved time and money by starting with a physical exam or was, as my friend described it, his “process of elimination” necessary given the nature of the issue and/or lack of medical information about me?

Too Much Money
The bill for the ER visit was more than I expected and my portion was also more than I expected.  The out-of-pocket maximum on my health plan was more than my deductible and the maximum annual HSA contribution.  I paid the bill but it didn’t feel right given the misdiagnosis, the testing that may or may not have been needed and the stress of it all.

Admittedly, when you are really sick or in pain, there is no such thing as too much money – cost becomes irrelevant and more care somehow seems better.  However, after the fact is another story especially if the value of the care received isn’t clear.  Billing clerks, for the most part, can say what was done when but few, if any, can explain why.   Connecting the dots between what and why without a medical degree and/or understanding someone’s thought process in the moment is almost impossible.

The only one that can truly connect all the dots needed to understand the value is the physician providing the service. That’s why I have to wonder …should physicians be connecting the dots (what, why and how much) for patients who are stable?

Safe to Say
There is always more to an issue than what meets the eye or what can be learned from an experience or two.  However, it seems like there is opportunity to enhance the way patients are triaged and informed during the treatment process to help connect the dots between cost and care so that the value of the care provided is clear.

It’s just human nature to take time to connect the dots.  But I also know there can be a day of reckoning, when you wish you had connected the dots more quickly.   -Al Gore

 

About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success. She has successfully led the transformation of ASCs and hospitals, advised technology and device companies on product development and commercialization  strategy and advised other professional firms on transactions.

Pricing Transparency

Will pricing transparency reduce the cost of care?

Many people inside and outside the industry are grappling with this question. A recent Harvard study reports that pricing transparency does not lower cost and they are not sure why.

Having access to prices is important to patients required to shoulder more of the financial burden for their care. For the most part, patients were already able to get the cost or at least a reasonable estimate in advance of their services from outpatient providers. However, comparable information is generally not available to patients when medical services are more complex and unplanned. Those complex and unplanned services are the real cost drivers of healthcare.

However, there is more to pricing transparency than most realize. Let me shed some light on it for you.

Charges vs. Contracted Rates

There have been a lot of stories in the news sounding alarms about the high cost of care.  However, the stories are often comparing charges from one provider to the next or comparing charges to Medicare reimbursement.  There is some validity to making those comparisons but in reality neither comparison has much to do with cost to the consumer.

Medicare requires providers to set a uniform charge.  There are so many billing codes that many large provider organizations, including hospitals and medical groups, set charges as a multiple of Medicare reimbursement rates.  For many organizations, Medicare reimbursement reflects a payment floor, not their break-even point.  Adding a multiple to those rates allows the provider to comply with the Medicare requirement of a uniform charge and set a charge sufficiently high to allow for full reimbursement from all payers.  The contracted rate is the cost consumers pay for the service and for most providers, it is a fraction of their charge. 

Contracted Rates

Contracts with commercial insurers such as Blues, Aetna, Cigna, United etc. are given volume discounts by large providers. Physicians by in large have to accept the commercial rates to participate in the plan unless they are exceptional.  The contracted rates from one insurer to the next vary because the rates reflect the market power of the insurer.  The market power of the provider is built into all the commercial rates and therefore, has little to do with the variability experienced by consumers.

For the most part, the contracted rates in existence limit the reimbursement to providers [in other words, limit what consumers pay] because they are paid a group rate for the billing code(s).  Each of the commercial payers use different reimbursement methodologies for complex services and items routinely passed through such as high cost implants and supplies.  The variation in terms muddy the waters and make the payment for those services hard for even professionals to compare without repricing technology. 

Out-of-Network Providers

Out-of-network providers added to the variability in charges and in most cases, their charges became the high cost outliers.  The reimbursement rate to non-contracted providers is lower than that to contracted providers. Consequently, the non-contracted providers raised their charges billed to insurers to make up for the total reimbursed amount but at the same time, discounted the amount billed to patients.  Patients choosing a high cost, out-of-network provider were largely unaffected but insurers or employers of self-funded plans in the end paid a hefty price.

As payers limited out-of-network benefits, the out-of-network providers kept increasing their charges which is why few employers now offer plans with out-of-network benefits and why the outlier charges should soon disappear if they haven’t already. Access to out-of-network providers is limited under most plans and most patients will pay more now if they choose to continue using them. 

Closed Networks

We’re entering another period of closed networks designed at least in theory to better manage the health and healthcare of patients by coordinating care and increasing compliance with behaviors that lead to healthy living.  However, these networks will also help reduce cost by using primary care physicians to channel patients to a fewer number of providers in exchange for bigger discounts. The downside is that patients often give up choice and control which scares some people.

Higher Discounts

Employer groups and others are reporting savings from using reference pricing and package pricing, also referred to as a bundled payment, which yield bigger discounts from providers on high volume services. Bundled payments make it easier for healthcare consumers to understand the cost of complex services and reference pricing makes it easier for them to choose a low cost provider.

However like most large businesses, healthcare providers including hospitals thinks about cost and profitability at a much higher level than a specific service or the patient.  Large providers can change their allocation methodologies to discount certain services as long as they can make it somewhere else.

Deeper cost cutting for all services will take some time.  What many outside the industry do not fully appreciate are all the constraints on the main cost drivers for delivering healthcare.  For instance, labor is the most significant cost driver for provider organizations and it is constrained by regulatory guidelines, unions, geographical location and staffing shortages.

So in the short run, the cost of some services may decrease and others may increase as a result of pricing transparency. The impact on the total cost of care will depend largely on what happens with demand and other initiatives to align the interests of the healthcare delivery supply chain.

With that said, pricing transparency is a good thing for everyone including healthcare providers. It is much easier to collect money for services rendered when people understand what they owe and know that they will receive good care in return.

Before a diamond shows its brilliancy and prismatic colors it has to stand a good deal of cutting and smoothing.

– Unknown Author

 

About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success.