Pricing Transparency Laws and the Need for Reliable Estimator Software
The CMS’ hospital price transparency laws are in full effect. In addition to requiring hospitals to post pricing data online, these regulations also make it mandatory for facilities to provide estimates to patients upon request and include estimates for ancillary providers as well.
To ensure adherence to pricing transparency laws and the No Surprises Act (NSA), your organization must have access to reliable estimator software. We’ll touch on the importance of this software and its role in patient satisfaction and hospital compliance.
To that end, patient estimates include an accurate estimate of hospital (technical), physician (professional) and combined services. Effectively, they should be accurate, complete, and clear. Specifically, they should:
- Be Designed to clearly communicates patient’s estimated portion
- Use the insurance company’s contracted rates for calculating the expected reimbursement (allowable)
- Incorporate the patient co-pay, co-insurance and remaining deductible
- Include optional financial arrangements
- Ensure accurate estimates so staff can communicate and collect obligation
- Incorporate all services – technical & professional
This much is the least expected. Let’s dive deeper into how these demands create the need for a reliable estimator software.
Estimator Software Accuracy and Hospital Accountability
According to CMS guidelines, hospital cost estimates must be within $400 of the actual final bill. Providing accurate estimates from day one helps hospitals comply with this mandate, prevent a costly appeal process, and also has downstream impacts on the revenue cycle.
When patients have an accurate upfront estimate of their bill and providers proactively work to keep costs down, repayment rates are better. This, in turn, keeps write-offs down and helps the hospital maintain a steady cash flow, which is critical amid economic volatility.
Why Hospitals Need Estimator Software
Hospitals need an estimator software for two reasons: consumers expect pricing transparency, and the government is essentially requiring it. According to a Gartner survey, 45% of consumers worry about unexpected healthcare costs damaging their financial stability. These concerns can cause prospective patients to avoid seeking care. Providing them with access to a user-friendly estimator software can help them better understand the costs of care and encourage them to visit your facility. From a compliance perspective, providing cost estimates is necessary to avoid fines or other penalties. Failing to adhere to the NSA and the CMS’ pricing transparency mandates can expose your hospital to severe consequences, as discussed.
How Can Hospitals Stay Compliant with Pricing Transparency Laws?
The federal government has provided clear guidance regarding pricing transparency. Generally speaking, hospitals must post charges on their websites and make that information publicly accessible. They’re also expected to provide “good faith estimates” to patients upon request.
Adapting an estimator software will help hospitals deliver this information to patients. However, CMS guidelines are constantly evolving. As such, hospitals should prioritize adaptive and agile software so they can stay compliant with the latest mandates.
Why Is Pricing Transparency Important to Hospitals
When patients are surprised with larger-than-expected bills, they’ll naturally be frustrated. Providing transparency from the outset gives the patient time to prepare for their upcoming medical expenses. Ultimately, they’ll be more satisfied with the care journey.
Optimizing transparency can help your hospital improve retention and patient satisfaction scores. Related to this, point-of-service (POS) collections require pre-emptive payment from all individuals, including those who pay entirely from their own funds and those who are insured and must pay a deductible, copay, or coinsurance amount. A growing number of health systems are turning to technology solutions to help generate timely, accurate price estimates for patients so this period goes smoothly.
Why Is It Important to Patients?
From the patient’s perspective, pricing transparency is all about taking the surprise out of medical care. Patients don’t want to receive a bill for more than the expected amount. In these scenarios, patients won’t be financially prepared and may have no way to make payments. Shedding light on the cost of care leads to a better overall patient experience.
How Long Does It Take to Prepare Good Faith Estimates?
Preparing good faith estimates (GFE) is time-consuming and labor-intensive.
The exact time to prepare a single estimate will vary depending on the number of services included in the quote. However, generating each GFE will likely take a team member anywhere from 30 minutes to two hours. Compiling estimates manually is risky. For instance, imagine that one of your staff members accidentally omits a service when generating a GFE. This service may cause the final bill to exceed the $400 accuracy range, leading the patient to dispute the charge. If the dispute is won by the patient, then the excess in charges will most likely be lost to the provider after both parties settle on an amount. Over time, this will continually hurt the organization’s revenue and profitability. If there are multiple instances of this happening and the patient wins the dispute then it can add up quickly, especially if you consider the cost of the appeal.
How Third-party Fees Complicate Estimates
Calculating in-house fees can be challenging enough on its own, but outsourced services and other third-party fees can further complicate the process of providing estimates. Consider knee surgery as an example. The estimate for knee surgery will include typical hospital fees, such as room charges, imaging expenses, orthopedic supplies, etc. Additionally, the estimate must include anesthesiologist fees, radiologist expenses, and other costs billed by third-party providers. Failing to include external charges on the quote will result in both compliance challenges and patient frustration.
Improving Workflows with Automated Estimator Software
As patients become increasingly aware of CMS’s good faith estimate requirements, your hospital will undoubtedly become inundated with requests. Spending one to two hours per estimate will become impractical when this occurs. Implementing an estimator software and automation tools is the most pragmatic step forward. Automation reduces the frequency of errors and enables your organization to generate accurate estimates faster. The right tools will also help your hospital stay within the $400 accuracy limit, reducing the number of billing disputes patients file. It will also lead to an increase in patient collections and a decrease in bad debt.
Is Estimator Software the Best Solution?
An estimator software represents the ideal solution to the challenges created by the NSA and the CMS’s pricing transparency mandate. Implementing estimator software into your workflow will help your hospital adapt to the rapidly increasing volume of quote requests. You’ll be able to provide accurate quotes, maximize estimated generation efficiency, and comply with the latest requirements.
How Estimator Pro Improves Workflows to Ensure Estimate Accuracy
To deliver maximum value for our clients, we’re exploring ways to provide automated alerts when estimates are off by over $400. This aspect of Estimator Pro would allow hospitals to remedy billing discrepancies and increase repayment rates proactively.
How PMMC Can Help Hospitals Optimize Estimate Accuracy
By combining leading-edge solutions like Estimator Pro with our robust contract management system, PMMC can help your hospital optimize estimate accuracy. With the support of our internal revenue team, you can further improve collection percentages, decrease write-offs, and enhance total cash flow. Schedule a consultation to learn more about how PMMC is helping hospitals adapt to pricing transparency requirements with Estimator Pro.