Anesthesia Business Consultants

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Anesthesia Industry eAlerts

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The movement toward increased healthcare price transparency is likely here to stay.  Anesthesia groups need to be aware that patients are going to have increasing access to information about the costs of procedures, and that this information could conceivably influence activity levels and patterns at their facilities.

December 3, 2018

In a previous eAlert, we noted that the demand for price transparency was likely to rise as patients continued assuming responsibility for larger portions of their healthcare costs, and that anesthesia practices should prepare by understanding the costs of their services and the role of quality and quality metrics in this equation (see “Anesthesia Practices Should Think About Price Transparency,” May 23, 2016).

The federal government appears determined to move healthcare in the direction of price transparency and has heightened its push, with the current administration naming it a major healthcare priority. 

Though consensus is still being formed on how to achieve price transparency and the extent to which it can actually benefit patients, transparency has become a key player in the shift toward healthcare "consumerism" spurred by the rapid growth of high-deductible health plans and other trends.

Transparency proponents, including the federal government, argue that, as patients shoulder more of their healthcare costs, they should be able to "shop" for healthcare services much as they do now for retail goods and other services, and that this "comparison shopping" will help patients make better decisions and drive down costs.

“We must do something about rising cost, and a key pillar is to empower patients with the information they need to drive cost and quality by making our health care system evolve to one that competes for patients,” Seema Verma, administrator for the Centers for Medicare and Medicaid Services (CMS) said in a recent blog post.

CMS already requires hospitals to either make publicly available a list of their standard charges, or their policies for allowing the public to view a list of those charges upon request.  However, updates to the final rule for the Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System specifically require hospitals to post this information online beginning January 1, 2019 and to update it at least annually.

And just last week, as part of CMS’s eMedicare initiative to give beneficiaries more cost and quality information, and as mandated by the 21st Century Cures Act, the agency launched the Procedure Price Lookup, an online tool that enables consumers to search average Medicare payments for a wide variety of surgical procedures that are performed in both hospital outpatient departments and ambulatory surgical centers. The tool provides national averages for facility Medicare reimbursements and the average copayments for beneficiaries who do not have supplemental insurance.

A catalyst for the current emphasis on price transparency was the work of a bipartisan group of Senators that reached out this past March to a large swath of stakeholders, including the AMA, the AHA and Blue Cross Blue Shield, for their input in determining the best course forward. “In healthcare, the lack of information and the inability to access it hurts patients and prevents normal market forces from driving competition, lowering prices and improving quality," the Senators wrote in a letter to the organizations. 

The average costs for surgical procedures available through the Procedure Price Lookup include the hospital outpatient department or ASC costs only, not professional services fees. However, this type of price transparency may impact anesthesiologists because patients may begin comparing the costs of a procedure at two or more facilities against the national averages they find on this site. 

If, for example, the cost for a hip replacement differs significantly between facilities, anesthesiologists may see some shifts in volume at their institutions. The emerging price transparency here, based on facility costs, may drive a group’s business in a number of different directions depending on their affiliations.

It’s also worth noting that not all costs are equal in healthcare.  Quality metrics, volume and success rates or outcomes also need to be factored in, and patients will need to consider these factors as well.

The AHA pointed this out in comments to the bipartisan group of Senators, noting the complex array of forces that influence pricing for medical care and why, as a result, consumer shopping for healthcare services remains a challenge.

"Patients have not used much of the data that already is available," the AHA stated, noting that as little as seven percent of medical care is "shoppable" by patients, in part because "treatment for the same condition will vary based upon the severity of the case, any compounding comorbidities, and a patient's genetic makeup. In addition, the need for health care often arises suddenly, and patients do not have time to compare price and quality information before seeking care."

The AMA has outlined eight ways to facilitate healthcare price transparency, including developing resources to help patients understand the multitude of factors that go into determining healthcare prices. But according to James L. Madara, MD, AMA executive vice president and CEO, the complex arrangements between employers, third-party payers, providers and patients can make it hard to identify those costs.

At this point, anesthesia groups should be aware that patients are going to have access to more information about the costs of procedures, and that this information could conceivably influence activity levels and patterns at their facilities as transparency comes to the fore. Patients are likely to begin using the Procedure Price Lookup and other price comparison tools more frequently as their out-of-pocket costs grow.

With best wishes,

Tony Mira
President and CEO