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The Paths to Price Transparency

Karen Minich-Pourshadi, for HealthLeaders Media, November 13, 2012
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"We felt the pre-encounter team would provide a great customer service benefit by letting patients know what their costs are up front. Otherwise they might go through with a service unsure what their insurance would cover and what their portion would be. They might get the bill and not be able to pay it, and we'd end up writing that off," explains Dregney.

Dregney says taking this approach has helped patients to recognize their portion of financial obligation for services, which he hopes will ultimately result in a reduction of bad debt. Lakewood serves five counties in Central Minnesota, two of which rank in the bottom five out of 87 Minnesota counties in per capita income and the remaining counties ranking in the bottom half in per capita income.

"We have a fair amount of Medicare coverage, and also a lot of self-pay, so we need to pay attention to this," says Dregney. "Now when a provider or mid-level identifies a patient in need of a surgical procedure or some type of imaging services with a higher cost, the pre-encounter team is notified so they can reach out and work with the patient to estimate the bill."

The outreach has been well-received by patients, Dregney says. But he points out the team still has no precise formula for staff to use to calculate an exact patient cost. When it launched the new department, he says the system added claims processing software by Rycan to help the staff sift through all the necessary data to come up with an estimate.

The pre-encounter team gathers info on the surgery or imaging service as well as the patient's insurance information and then plugs the data into the program. The program then runs a pricing model based on the organization's claims history and kicks out a price range for the procedure with a minimum, maximum, and average. Pre-encounter staffers then contact the insurer to verify coverage and learn the patient's remaining deductible and out-of-pocket maximum. The information is pulled together in a one-page letter that explains the approximate total charge for services and what the patient's approximate responsibility will be.

Setting up the Rycan pricing profile required the identification of everything that goes into each specific procedure and then looking at claims history for those procedures to see what is typically charged. "We then identify the total charge outlier amounts, just to alert the patient that the price given is an estimate—some people have been charged more or less than the average," Dregney says.

Though some patients are interested in learning about the cost of
treatment, Dregney notes that the numbers are still small—the pre-encounter team has generated just 175 estimates over the past two months. Nevertheless, the price estimate for a procedure can be off-putting to patients.

"Most of the patients who received estimates went through with their procedures. Only a small percentage decided to delay the service, and I have only heard of one patient who has gone elsewhere for the service," he notes. "Those were all elective procedures that the physician had indicated were not essential services for the patients' health, however.

"A lot of what the team does is ensuring the patient is authorized for a service. For some services we need to make sure that a physician has tried alternative steps before the patients goes in for a surgical procedure. In the past we might've gone ahead before doing that and then learned that the procedure wouldn't be covered—that's costly," he notes. "And we can now offer patients a larger discount if they pay their portion on or before the date of service because we're able to avoid all the added back-end costs."

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