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Prepare your hospital for consumerism

Patient Access Weekly Advisor, September 19, 2007

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Threats and pending legislation aside, we are swiftly advancing into an age of consumerism in which prospective patients will have the ability-and the tools-to choose your services over another's. That said, it's important to get your fee structure in line and ready for public display if and when customers begin inquiring about pricing, says Donna K. Gilley, CCS, CHC, director of revenue cycle and regulatory compliance for LBMC Healthcare Group, LLC, in Brentwood, TN.

Because so many hospitals haven't utilized a consistent pricing methodology, the process to get up to speed is somewhat detailed, Gilley says. She suggests taking the following four steps to right your ship:

1. Understand the true cost for a given service. A recent study conducted by the Medicare Payment Advisory Commission revealed that different hospitals assign the responsibility of pricing to numerous people and strategies. The results are significant differences between the prices of the same procedure or product from one hospital to another.

   "With the variety of methods a hospital uses to update its charge description master [CDM] and associated fees, it is important that all of the team members understand the relationship between the true cost and the pricing decisions," says Gilley. "So often prices are based on obtuse numbers that may or may not have anything to do with the cost of providing the services."

2. Determine what your pricing methodology will be. You could use several strategies here (e.g., a percentage of cost, a multiple of the Medicare allowable, etc.). "There's no wrong answer. But consistency and reasonableness will be the key moving forward," says Gilley.
3. Apply that methodology across the complete CDM. "This is the least complicated step [because] it only requires you to update the CDM to reflect the pricing structure decisions you have already made," Gilley says.
4. Decide whether and how you want to disseminate this information. "Consult local regulations and your local hospital association for direction [about whether] you are required to make your pricing available and to what degree you will need to share this information," Gilley says. "Then determine the vehicles that you will utilize to disseminate the information. Just make sure that your message is consistent and that your methodology is easily explained."

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