On behalf of the entire Allegiant Experts team, we would like to wish you all a very happy, safe and prosperous 2021. With the new year now a week old, the reality is setting in that the pandemic isn’t going to miraculously disappear. However, we hope you can join us in our renewed optimism that sees this year as the one when we’ll finally be free from the tough times of yesteryear.
The start of 2021 has begun with a final rule from Medicare.
We’re hopeful this final rule will help put an end to surprise medical bills with enormous charges. As reported by FederalRegister.gov, this final rule establishes requirements for American hospitals to establish, update and make public a list of their standard charges for the items and services they provide. These actions are necessary in order to promote price transparency in health care and public access to hospital standard charges.
“By disclosing hospital standard charges, we believe the public (including patients, employers, clinicians, and other third parties) will have the information necessary to make more informed decisions about their care,” reports the website, “We believe the impact of these final policies will help to increase market competition, and ultimately drive down the cost of health care services, making them more affordable for all patients.”
The Medicare final rule includes definitions of terminology.
The objective is to standardize some health care terms related to hospital charges. As mentioned, these new and exciting changes promote increased transparency in health care pricing. However, they are challenging the specificity of our language. For those of us who have worked with charge masters and provider fee schedules for years, charges and payments (collections) have generally been distinct concepts.
The new CMS definition of “Standard Charges” however, includes the concept that “Charges” can mean both the billed charges and the total payment amount collected by the hospital.
Take a look at a few of the new definitions.
Gross charge: The charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts. (a.k.a. "Billed Charges").
Discounted cash price: The charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service. (a.k.a. "Cash Price" or "Self-pay Discounted Price").
Payer-specific negotiated charge: The charge that a hospital has negotiated with a third-party payer for an item or service. (a.k.a. "Contracted Rate" or" Allowed Amount"). This is the amount of money the hospital will be paid from all sources (insurance and patient). For example: Insurance Payment Amount = Allowed Amount - Patient Liability Amount (deductible, co-insurance or co-pay).
In addition, Medicare is now requiring hospitals and ambulatory surgery centers to de-identify and publish their low and high collection amounts from any payor. This will mean that the range of payments that any given hospital accepts will be publicly available.
The new data elements and terms as defined in the final rule are:
De-identified minimum negotiated charges: The lowest charge that a hospital has negotiated with all third-party payers for an item or service.
De-identified maximum negotiated charges: The highest charge that a hospital has negotiated with all third-party payers for an item or service.
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