Learn what the hospital price transparency rule means to your organization. This article discusses the types of healthcare audits and how to prepare for them.
In 2022, a new Hospital Price Transparency Rule came into effect. Unfortunately, many hospitals are struggling to implement these new standards and are facing difficulties into 2023.
Regulations and best practices are always changing in the healthcare industry. Healthcare audits are designed to help facilities provide the most efficient and effective patient care, but they can also be a source of stress and frustration for organizations. Failing a healthcare audit can lead to financial and legal penalties.
The best way to protect your facility is to monitor your compliance risks proactively. This means ensuring you are staying updated with the most recent local, state, and federal regulations.
If you were to be audited today, would your facility pass? Learn more about why the healthcare industry needs audits, what audits look for, and how to prepare your facility to comply with new price transparency requirements.
What is the Price Transparency Rule?
The price transparency rule is the law that requires hospitals to publicly post information about their standard prices and negotiated discount rates. The cost of healthcare in America is high. The price can vary widely by region, payer, or insurance provider. For a long time, hospitals did not disclose the price of services to patients before receiving care, meaning it was nearly impossible to shop for competitively priced care. Even the individual provider administering care might not know exactly how much a procedure or service would cost.
An executive order passed in 2019 directed the Department of Health and Human Services to create new guidelines that would help reduce healthcare costs. As a result, the Centers for Medicare and Medicaid Services (CMS) public rule on price transparency requirements for hospitals came into effect on January 1, 2021. Additional rules took effect in July 2022.
Under these new rules, hospitals must publish their billed prices and rates for all inpatient and outpatient services that have been negotiated with insurers. In addition, all items and services must be listed in two formats: a machine-readable file and a display of shoppable services for consumers.
Price transparency challenges
By August of 2022, more than a year and a half after the new pricing transparency rules initially went into effect, only 16% of hospitals reviewed by the CMS had complied with the new rules. In June, the agency began issuing warning notices and requests for corrective action and even issued fines to some facilities.
Why are hospitals failing healthcare audits?
The Craneware Group hosted a round table with several healthcare leaders from across the United States to understand why so many hospitals had not passed with the new ruling. Though most of those interviewed represented hospitals and systems that had implemented the changes, they offered insights into why others might be hesitating.
Like other sectors of the economy, the healthcare industry has also been affected by high inflation. Building and maintaining price transparency systems is an investment that is causing many hospitals to face staff shortages and supply chain disruptions. Operating costs are also higher than they used to be. If you are experiencing staff shortages, Coding+ could solve your coding needs.
With competitive pricing, hospitals are at risk of losing revenue. If patients can compare prices across multiple institutions and select the least expensive option, it could lead to hospitals trying to stay competitive by offering the lowest price. In addition, payers may also lower their reimbursement rates if they notice that a hospital or system accepts lower rates from one of their competitors. All these factors cause concern that this may force hospitals to specialize if only certain services remain profitable.
Types of healthcare audits
Revenue Cycle
A revenue cycle audit will look at every step of the patient’s interaction with your facility, from booking their initial appointment to receiving their bill. Revenue cycle audits have two purposes.1) it ensures that patients have the best experience when interacting with a healthcare provider. 2) it prevents crucial revenue loss.
Electronic Health Record
An electronic health record audit analyzes your historic data to ensure that the patient’s information was captured correctly and efficiently from the start. Failure to obtain the correct and necessary documentation, demographic information, and signatures could delay payment to your facility. In some cases, it may even impact a patient’s treatment timeline. A patient access management audit may review paperwork like Medicare Secondary Questionnaires and Advanced Beneficiary Notices.
Documentation and Charge Capture
The documentation and charge capture audit includes everything during or after the patient’s visit, then the physician records any diagnoses, treatments, tests, or procedures assigned during the visit. It is the coder’s responsibility to convert those activities into charge codes according to standard regulations. If done incorrectly, the payer can deny the claim. During this audit, the facility’s medical records are reviewed to ensure current regulatory standards are met.
Patient Financial Services
A claim denial audit ensures that claims are adjusted correctly, reimbursed, and properly captured. This type of audit may include a review of the facility’s Medicare Overpayment and Refund policy, Claim Denial processing, and self-pay collection practices.
How to Prepare for a Price Transparency Audit
The CMS is investigating complaints and auditing randomly sampled hospitals across the country. If your institution is audited and fails, you may receive a written warning, a request for a corrective action plan, or a penalty. In addition to a fine, failing to comply may be publicized on the CMS website. Start preparing for a price transparency audit now. Follow these steps to effectively prepare for an audit:
Step #1: Include all the necessary data points in the machine-readable file
List your standard charges for all procedures, items, or services a patient could receive during an inpatient admission or outpatient visit—in a single machine-readable file that is easily accessible on your public website. The list must include the gross charges, discounted cash prices, and payer-specific negotiated charges for each service. You must also include the minimum and maximum negotiated charges for each service without identifying the payers.
Step #2: Provide thorough information about shoppable services
The CMS has identified 70 required services for which every hospital and health service must provide payer-negotiated rates; each hospital must also choose an additional 230 services, including supplies and procedures, room and board, facility fees, and professional charges. A shoppable service is any service your hospital provides that a patient can schedule in advance, like a vaccination. This information must also be publicly available on the hospital’s website in a consumer-friendly format.
Step #3: Disclose additional information
Your organization must provide all information related to a service, even though there may be unexpected factors that could lead to additional charges. It is highly recommended to add disclaimers to your website to account for any variations to protect your facility from fines and penalties.
Clearly state that prices are estimates or ranges, and any additional services or alterations in care could change the final price. In addition, the final diagnosis and billing codes may differ from what is listed on the price estimator. Keep in mind that although a patient’s insurance may cover the hospital, out-of-network providers may provide additional services. This, too, can affect the final cost of a patient’s treatment.
To ensure a smooth implementation of your price transparency measures:
- Verify that all the appropriate fields in the machine-readable file are filled out and that there is no missing data.
- Cross-check the payer information and any information about insurance plan coverage elsewhere on the hospital’s website to confirm that they match.
- Finally, enlist a communication or UX specialist to evaluate all written materials for clarity and readability.
RCCS is the premier provider of healthcare compliance resources across most specialties. As stated previously, audits are a terrific way to identify errors, prepare and for upcoming audits. Contact us today to take control of your processes, avoid denials and prepare for price transparency audits.
ADDITIONAL SOURCES USED:
Scott Gerard, CPA; Rebecca M. Welker, CIA; and Eric Jolly, CPA “Top Risks For Healthcare 2021” Crowe, 2021.
Studycorgi.com “Preparation of Healthcare Revenue-Cycle Audit” StudyCorgi, Dec 6th, 2022