Systems move to boost pricing 'defensibility'

Healthcare systems are taking steps to address the “defensibility” and transparency of the way they bill for services—an issue that came into the spotlight earlier this year in the wake of a controversial Time magazine cover story.

But it's not only uninsured patients—whose stories were much of the focus of Steven Brill's 24,000-word article, “Bitter Pill”—who are asking questions about why their hospital bills are running in the tens of thousands of dollars for short stays and simple procedures.

Hospital pricing has also been a key issue for payers, particularly America's Health Insurance Plans, which has pegged price increases as a major factor behind rising premiums.

“I think there's a real movement toward more strategic thinking about pricing and its defensibility,” said Keith Neilson, CEO of Craneware, which makes software for healthcare billing, chargemaster management, auditing and Medicare compliance.

He noted in an e-mail that the shift was already beginning “years” before the Time magazine article in response to cost pressures.

Yet with the idea of a “chargemaster” now in the public eye, hospitals once again have been pulled into the ongoing national discussion about healthcare costs—and not in a positive light.

The American Hospital Association responded to the criticism in a news release, pointing to the Patient Friendly Billing Project and other efforts to simplify and explain billing information.

“Today’s hospital bill is a symptom of a broken payment system,” the AHA said, citing a web of governmental regulations, the expectation that facilities will provide care even to those who can’t afford it and the vast resources it takes to run a hospital.

Todd Craghead, vice president of revenue cycle organization for Intermountain Healthcare, Salt Lake City, said he was not aware of increased patient questions about their bills after the Time story.

But he said in an e-mail that the system has created “focus teams” over the past several years to “review, improve and strengthen” its pricing strategies “so that they support the environment we are moving towards as it relates to healthcare reform.”

He added that several work groups regularly evaluate the system’s pricing practices, and Intermountain also reviews its own information against industry benchmarks.

Neilson noted that as financial pressures build for hospitals, they will continue to model different pricing scenarios.

“A well thought out pricing strategy that has a basis in cost, especially in pharmacy and patient-chargeable supplies, helps give you defensible pricing, which is the aim of the clients I’ve spoken to,” he said.