Implementing Price Transparency Tools at Ambulatory Care Centers

FEBRUARY 17, 2020
Albert Chan, MD, MS, Chief of Digital Patient Experience, Sutter Health
Albert Chan, MD, MS

Albert Chan, MD, MS

In November, the Centers for Medicare and Medicaid Services (CMS) finalized rules requiring hospitals to make their standard charges available online upon request. The implementation of the rule is still a year away—and possibly longer as hospital groups have filed lawsuits against the administration to block parts of the rules. However, healthcare organizations across the country are understandably watching closely to see what the potential impacts will be on them and their patients.

In California, where Sutter Health’s not-for-profit, integrated network is based, we have some of the longest history with healthcare price transparency legislation of any state. Since 2004, California has required hospitals to disclose their chargemasters, and since 2006, the state has also required a list of charges for the 25 most common outpatient procedures. We’ve learned from our own experience and the numerous studies that have been done on listing hospital prices that this alone is not particularly helpful for patients—it doesn’t provide the clearest picture about what they will actually be responsible for paying.

Unfortunately, up until recently, there did not seem to be a better way. That has changed in the last 5 years.  

In 2015, Sutter reached its goal of connecting all of its affiliates with a shared electronic health record (EHR) linked to a patient portal/personal health record. By 2017, we had added online bill pay for inpatient services to the portal across the network. At this point, we had the systems in place to try something revolutionary that we’d long wanted to do: build a cost-estimator tool directly into the personal health record that would provide our patients with an up-front idea of their likely costs and allow them to plan their care with these costs in mind.

Patients would have true personalized fee transparency on what they would actually owe based on their specific insurance plan and year-to-date healthcare services received. Best of all, the tool would be right where they were already used to going for test results, appointment scheduling, bill pay, and messages from their doctors.

We knew creating this type of end-to-end solution would not be easy. To work, the cost estimator had to be as accurate as we could make it and that would require thousands of staff hours and the cooperation of the health insurance companies we contract with, as well as the support our technology vendors.

One big challenge was data mapping issues related to meeting the Electronic Data Interchange standards that are part of the Health Insurance Portability and Accountability Act (HIPAA). We also did not know what the impact of giving patients up-front cost estimates would be for them and their providers. What if some patients declined needed care? What if our providers were inundated with calls from their patients asking them to explain their costs?

Realizing that we were among the very few health systems with both the ability and leadership support for doing this, we committed ourselves to publishing our results. Whatever the results might have been, we wanted other health systems, including our competitors, to learn from our experience and use our findings in their own approaches to creating cost estimators for their patients.

Because of the complexity of hospital inpatient billing and reimbursement, we decided to start with the outpatient ambulatory care environment and focus on 220 of the most common services we provide. It took 7000 hours with 7 full-time employees over 18 months before we were ready to launch our ambulatory-care cost estimator in August 2018. Along the way, we partnered with our top 10 insurance payers by volume.

Our full results are published in the December 2019 issue of the Journal of the American Medical Association (JAMA) Network Open, but were pleased to discover that in a follow-up survey of patients who received an explanation of benefits (EOB) to compare with the estimate, 83.9% (+/- 5%) of the estimates given were accurate. Of the >4600 estimates included in the study, only 33 led to calls from patients about a significant variation in cost from the estimate, and of those, the majority were handled by our call-center teams. Among the surveyed patients, only 7 said they’d called their clinician’s office to ask about the estimate.

Another important result was that only 1.9% of patients surveyed elected not to receive care after their estimate. We had worried that patients might forego needed healthcare services. However, this turned out to not be a major concern, at least in the population of patients in our study.

What the patients surveyed did report was using the results for expense planning. Two-thirds rated fiscal planning as a useful benefit of the estimate and 76.7% said that having a cost estimate improved their overall experience of care at Sutter Health. This may indicate that our patients’ concern with not knowing costs ahead of time was even greater than we had realized.

Regardless of where someone may stand in current health policy debates, everyone can agree that the current system where patients typically do not know how much they may owe until after they’ve been treated is not ideal. As efforts to improve price transparency continue, forward- thinking health care organizations will team up with innovative partners to deliver ways that transform government policy into reality. And we encourage our healthcare community to rigorously and transparently share our experiences to inform workable alternatives that patients can actually use.

At Sutter, we are still in the beginning of developing our tools and studying the impact. Our next big step will be taking what we learned in ambulatory care and developing a price estimator tool for hospital care. As we move forward, we hope to continue sharing our results and what we’ve learned so that others can draw on them when innovating their own solutions to this complex problem.

Albert Chan, MD, MS, is the Chief of Digital Patient Experience at Sutter Health. The presented analysis reflects his views, not necessarily those of the publication.

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