Standard Machine-Readable File

Recommendations for a Standard Machine-Readable File

The CY22 proposed rule covered many topics, but, in our opinion, the guidelines and clarifications surrounding machine-readable files were some of the most critical.

The Proposed Rule’s observation that there was a “lack of uniformity in the way that hospitals display their standard charges (84 FR 65556)” wasn’t a great surprise to the industry. The original guidelines required certain data elements but did not specify an exact file structure. Hospitals naturally constructed a file that best fit their data, but these files could be difficult to compare from one hospital to the next.

CMS has been very clear that its goal is to make the data as accessible to the public as possible, so it’s understandable that they saw clarification in this area as a priority. We believe CMS is right that there is a wide variety of file structures out there, and that makes it hard to meaningfully compare hospitals. Our research shows a few challenges to fixing this particular issue.

First is the presence/updates of information. How do we locate and download the files? This issue will improve once hospitals use the CMS naming convention for machine-readable files. Another solution would be for CMS to define “prominently displayed” as requiring two clicks from the hospital or health system home page.

The next challenge is file type and layout difference. There’s a lot of variation between hospitals and systems. Requiring the same file type and standardizing the structure, as well as defining the data elements, could resolve this and will help create a national database.

Relational differences are another hurdle. Hospitals sometimes report payer-specific negotiated charges with HCPCS, MS-DRG, APC, per diems, case rates, and charge codes. This variation can be solved by creating a standardized display.

Payer naming differences also cause issues since there are no standardized naming conventions. Again, a uniform structure can solve this issue.

To this end, we have constructed a proposed standardized single machine-readable file. In December 2019, CMS stated that a single machine-readable file could have different sections but needed to contain all required elements. Here’s how each section could be defined to allow for uniform reporting. What follows is a summary of our recommendations. You can find a more detailed description here.

Section One: Gross Charge Information

This includes six fields. The primary comparison link is CPT®/HCPCS; revenue codes can also be compared on a more manual basis through item descriptions, as well (useful for room rates and operating room associated codes, as primary examples).

Section Two: Discount Cash Price Information

Not all hospitals have established their cash pay policies in the same way. To account for this variation while still permitting standardized reporting, we believe the “Discount cash price” section should have two options, Policy and Price List.

Policy – a text field for an explanation of the hospital’s policy, how it is applied, and contact information for financial assistance.

Price List – for hospitals with an established price list, information could be displayed in the same format as the Gross Charge display.

Section Three: Payer-Specific Negotiated Charge

This is the area that contributes most to the lack of consistency within the files. There is an incredible amount of variability. It is very difficult to compare payers and plans from one hospital to another. Here is how we propose tackling it.

            Standardized Payment – Unless all payers utilize the same payment methodologies it isn’t possible to look at payment differences. Standardized payment rates and utilization must be considered in order to understand payment differences. CMS has established payment systems for inpatient and outpatient claims that are utilized by all hospitals subject to the transparency reporting requirements. The solution to standardizing disparate payment systems is for hospitals to determine how the claim would be paid using the specific payer negotiated contractual language and then reported under Medicare-based grouping logic by MS-DRG (inpatient) or primary APC (outpatient). The steps to do this, are:

  1. Derive expected claim payment for all items and services based by consulting the negotiated rates and terms with the specific payers. This would be done for all claims – not using historical reimbursement – but a calculation of payment using current payment terms and rates.
  2. Determine the MS-DRG (inpatient) or primary APC (outpatient) assignment for the particular patient claim. Grouper logic is quite common for hospitals and many already run every claim through Medicare logic to determine a MS-DRG assignment. Each claim would be labeled with a MS-DRG or primary APC designation (more on outpatient grouping later).
  3. Report the standardized payer-specific negotiated charge by MS-DRG or APC for all required payers in a simple format illustrated below. This display would encompass all items and services and service packages and would also be representative of service utilization – the critical element needed to understand payment differences.

Again, further details can be found here. Hospitals could derive the payer-specific negotiated charges with their contracted rate sheets and terms and applying those to actual patient claims. Without patient claim detail the hospital cannot satisfy the requirements of the rule because the number of combinations of items, services, and service packages is nearly limitless on a per-patient basis.

Standardized Payer Mapping – Once payment has been standardized, payers must be compared through common mapping. CMS could create a list of national/regional payers and the hospitals could link to that. This map could be for the top twenty or thirty payers and would allow for easier comparisons.

Standardized Reporting Structure – Here is a simple, standardized format that would accommodate these needs.

Section Four: Payer-Specific Negotiated Charge

The benefit of using the structure identified in Section Three is that minimum/maximum values are very easy to present. A researcher could easily calculate minimum, maximum, and other statistical measures based on the standardized data format presented. Still, this information could be compiled like this:

We believe that if the CMS seeks to standardize the Machine-Readable File it should do so in a way that will meet current requirements while providing meaningful information. The structure we have proposed addresses these requirements and solves for the challenges that stakeholders are experiencing with current disclosed data.

To see a complete summary of the proposed rule, click here! To see our complete response, click here!

To watch our free summit on Price Transparency, check it out here!

CMS Sends Out Price Transparency Warnings

Since the passage of the ACA, Price Transparency has largely been a bipartisan issue, meaning that new rules and regulations have appeared, regardless of administration. CMS’ goal is to make it easier for patients to compare prices between hospitals. However, their final rule, which went into effect January 1st, had not yet been followed up by enforcement. CMS’ website claimed they were running audits and reviews of hospital websites, and the industry waited to see if they would start cracking down. 

And they have. Well… gently. Last month, CMS began sending its first warning letters out to hospitals that were not compliant with their Price Transparency rules.  

This is in line with their planned escalation. Each hospital will have 90 days to address the letter and CMS will then re-review. After that, the hospital will either be found compliant or receive a second letter from CMS, possibly with a plan to address how they can become compliant. CMS may choose to fine the facility up to $300 a day and make their non-compliance public on a CMS website.  

Although some hospitals may plan to take the monetary hit rather than comply, the negative publicity may be concerning. CMS has said this plan is a last resort, and they plan to be careful not to publicize hospitals that are taking corrective action but have not yet achieved full compliance. 

This first step sends a loud and clear message to the hospital finance community that CMS is serious and intent on taking action. Now is a good time to reevaluate your price transparency and make sure it is compliant and patient-friendly.  Want to learn more about the history of Price Transparency, what hospitals are doing to become and stay compliant, what you can do now that CMS is cracking down, and how we can help? Sign up for our free Spring Summit!

How do Hospitals Compete with Free Standing Clinics?

The continued pressure on shoppable services has heightened the competition between hospitals and freestanding facilities. But what effect does this have on their day to day business? We analyzed the rate at which hospitals and their freestanding competitors have increased charges in four key groups from 2015 to 2019: imaging, procedures, labs, and therapies and found some interesting trends!

The chart below compares U.S. averages from Medicare data for 2015 and 2019. To account for the difference in charges due to case mix, we have adjusted procedure prices by their Medicare Ambulatory  Patient Classification (APC) relative weight. We mapped the HCPCS to the appropriate group, calculated total charges and total APC Relative Weight (RW), and finally divided total charges by total RW to arrive at the average charge per RW of one.

Average Charge per APC Weight of One

In imaging, we see hospitals have slightly closed the gap, increasing their average charge by 25% compared to 29% at their freestanding counterparts. This is a small difference and suggests that hospitals may not believe price elasticity in this area is very high and they are willing to maintain a price premium. 

Looking at procedures, hospitals have increased their average charge by 15% compared to 2015, as opposed to ambulatory surgical centers where the rate of increased remains nearly flat at 1%. It should be noted that while the average charges in this area look competitive between hospitals and ASCs, hospitals often do not include surgical supplies or anesthesia in their pricing for procedures. This differs from ASCs where the price is more inclusive. The relatively low rate of increase for ASCs (1%) suggests that ASCs may see little association between price and net revenue, or they may perceive a highly competitive price market with hospitals. 

Labs are moving at similar rate of increase with hospitals increasing their average charge by 31% compared to 28% at the freestanding facilities.

When looking at therapies, hospitals are closing the gap with freestanding facilities, increasing their charges by 11% compared to 16% at the freestanding sites.

The critical question for healthcare providers in these four outpatient service areas is to what extent does price drive market share?  In the four areas that we reviewed, the relative difference between hospital and free-standing prices remained relatively constant.  Only in the procedure area was there a significant variance between hospital and free-standing price changes which may suggest market stabilization in these areas.  Price transparency could provide some significant future price movement as hospitals modify prices to enhance their relative marketplace image.

Is your facility interested in understanding your pricing position relative to freestanding competitors? We can help!

CMS Auditing

Is CMS Auditing For Price Transparency?

Last year the hospital industry faced major changes to the availability and accessibility of their prices. Now that 2021 is here, and the new CMS rules are officially in effect, CMS plans to audit how successfully the industry achieved compliance.

According to the CMS website they have already selected hospitals for their initial audits. We’re not sure how hospitals were selected for audits, or what criteria went into CMS’ decisions, but we do know that some of the audits will probe specific complaints and patients can submit complaints on the CMS website. Additionally, we don’t yet know if hospitals found outside of compliance have been informed or fined.

Because there’s no single place to find the information, making sure every hospital is compliant and up-to-date may be a laborious, if not impossible task. That won’t stop CMS from investigating individual hospitals and systems, especially if they suspect, or have a report, that they are not compliant.

Noncompliance isn’t without risk. Should a hospital fail to post their prices, or decide not to do so, they could face a fine of $300 per day. CMS’ website states that there will be several steps before this, however, including a written warning notice and requesting an action plan.

Of course, hospitals can appeal before a judge, and have 30 days to do so. It is up to each facilities’ administration to determine how much risk they are willing to take.

What does this mean for you and your organization? Well, it depends on how much work you’ve already done. How close are you to compliance? What work still needs to be done?

We can help! We have experience with the types of files CMS requires as well as building price estimator tools. Give us a call at 888.779.5663 or see our price transparency resources here.

What Would Die Hard Cost John McClane (and His Hospital) (This Year)

Every year, as the winter holiday season rolls around, the greatest debate of our time resurfaces – is Die Hard a Christmas movie?

We at Cleverley + Associates believe that the answer to this question may be beside the point. What’s important are the traditions we create for ourselves, especially around the holidays. What really matters is what brings us together and make us feel happy and fulfilled.

But also, yes. It’s a Christmas movie.

Plus, it’s a totally awesome action movie, which means injuries…a lot of injuries. That got us thinking – we assume that John McClane went to a hospital eventually, and considering what he’d gone through, what would his treatment cost him and the hospital?

Last year, we speculated wildly on Mr. McClane’s bill. Let’s see what would change this year! As we pointed out last year, we’re not doctors, we’re data nerds, so our diagnosis and treatments are only tangentially related to real life medical advice.

Our hero sustains his first injury (or probably injuries) as he falls down the stairs while fist fighting. There are a lot of injuries that can occur from both a fall and a fight, but since Mr. McClane goes on to punch several other people, we can rule out fractures, spinal injuries, and basically anything that would put in him in traction.

But we can’t rule out a concussion, or a subdural hematoma.

He’d probably get an MRI and CT scan (Let’s go ahead and do both, since he’s a hero.)

We’d also want to do an ImPACT test.

This year the hospital saved a whopping $11, while Mr. McClane will owe $917 more than last year.

Next up, the most famous injury, deep cuts to our hero’s feet, because he walked across broken glass.

Ow.

So, we’re talking lacerations to the feet.

We’re going to need a lot of antiseptic, bandages, and probably stiches. Also foreign body removal from the wounds.

Again, ow.

It looks like Mr. McClane saved $466 on his terrible and iconic podiatric injury! It cost our fantasy hospital $104 more.

Next up, poor McClane is shot in the shoulder! The following scenes, where he still manages to win in hand-to-hand combat with the villain, show that the bullet likely grazed him. Of course, we can’t rule out that the bullet is still there, or a shard of it. So, we’re going to have to explore the wound to make sure it’s clean, and probably take an x-ray to make sure we got all the bullet bits out.

This year that procedure looks cheaper for both John and the hospital! Mr. McClane will save a total of $1,553 while the procedure will be $402 cheaper for the hospital!

Lastly, in the grand finale, John McClane wraps a fire hose around himself and bungee jumps off the building. This is, generally speaking, a terrible idea. He then breaks through a window using his already battered body. Again, not a great idea.

This could, of course, cause a variety of injuries, but let’s go ahead and just assume the worst – a fracture of the vertebrae and ribs. There would probably also be internal damage as well, but considering he’s still walking around being witty, let’s assume he’s miraculously okay-ish.

These procedures will cost McClane $112 more than last year, and cost the hospital $28 more.

The end of the movie seems to suggest that McClane rides off into the sunrise with his wife, triumphant and filled with the Christmas spirit. I assume they didn’t go straight home with the hope that he would survive until morning. More likely they stopped at the ER to at least make sure he wasn’t bleeding internally.

So here’s everything all together! Overall, both John and the hospital saved money this year. John spent $970 less and the hospital saved a total of $281!

Happy Holidays everyone! Yippee-ki-yay!