A response to the FY19 IPPS Proposed Rule (CMS-1694-P) for Requirements for Hospitals to Make Public a List of Their Standard Charges via the Internet

The FY19 IPPS Proposed Rule contains a section for requirements for hospitals to make public a list of their standard charges via the internet. This section of the proposed rule revisits a reminder contained in the FY15 IPPS Proposed Rule and ultimately the initial calls for transparency in the Affordable Care Act (specifically, 2718(e) of the Public Health Service Act). That language required hospitals to “either make public a list of their standard charges (whether that be the chargemaster itself or in another form of their choice) or their policies for allowing the public to view a list of those charges in response to an inquiry.”

It is no surprise that the CMS is attempting to continue this national dialogue as many providers still struggle with how to effectively improve price transparency. In fact, our firm has conducted national provider surveys on how hospitals are approaching price transparency and the areas that tend to receive the most price inquiries from patients. The results of those surveys have been transferred into HFMA-related publications. What we’ve found is that the vast majority of hospitals are complying with the ACA transparency language by providing a means for patients to request pricing information – but not – through public display of pricing information via a website or some other form.

As a result, the FY19 IPPS Proposed Rule indicates that as of January 1, 2019 guidelines will be updated to require hospitals to make prices available via the internet. In addition, the proposed rule requests input on several price transparency definitions, methods, and measures. The purpose of this paper is to provide hospitals with language that can be used to respond to the CMS. We have submitted this as an official comment, however, we believe multiple voices should be heard so we are providing our thoughts as a resource.

Click here to view our full response and learn how you can comment on the proposed rule as well.




11 Metrics Reveal the Best Strategies For Cutting Outpatient Prices

Health systems must decide which hospitals should be targeted and how quickly price reductions can be implemented. These systems are beginning to establish strategic pricing directives that deal explicitly with outpatient pricing at their individual hospitals. These systems have two critical decisions: which hospitals should be targeted and how quickly price reductions can be implemented.

In our new white paper, which appeared in the Spring issue of HFMA Strategic Financial Planning, Bill Cleverley describes how hospitals can respond to increasing pressure to lower prices for “shoppable” services.

To download the white paper click here: Best Strategies For Cutting Outpatient Prices.

To see all our recent research and white papers click here.

New Book Suggests Actual Hospital Inflation Well Below CPI Numbers


The 2017 State of the Hospital Industry published by Cleverley and Associates shows a dramatic difference between the Bureau of Labor Statistics reported values for hospital cost inflation when compared to actual payments received by hospitals when all payers, including government are included.

During the period 2010 to 2015, the BLS reported average annual inflation rates for hospital outpatient services of 4.44% and 4.89% for hospital inpatient services.  Data for all short term acute care hospitals in the US during the same period averaged 1.2% using the Net Patient Revenue per Equivalent DischargeTM.  Other key findings showed that average 5-year hospital inflation rates increased the greatest in Texas (2.4%) and were the lowest in South Dakota (-2.0%).  The Austin MSA had the highest increase (3.9%) while Jacksonville had the lowest value (-2.1%).  Investor Owned hospitals had higher rates of inflation than Voluntary non-profit hospitals (1.5% compared to 1.0%).

The 2017 State of the Hospital Industry is an annual study that presents a concise yet revealing statistical analysis of the US hospital industry. More than 80 key performance metrics are presented across a three-year period providing an insightful review of the financial performance of one the largest sectors of the US economy. It’s a great reference source for those involved in hospital finance. The publication also presents the annual Community Value Index® Leadership Awards. The Community Value Index® (CVI) was developed by Cleverley & Associates to provide a measure of the value that a hospital provides to its community by examining ten measures in four key performance areas. A complete list of the highest ranked hospitals is also provided.

Written by William O. Cleverley, Ph.D., a noted expert in healthcare finance, the State of the Hospital Industry reports selected measures of hospital financial performance and discusses the critical factors that lie behind them.  The publication focuses on the US acute-care hospital industry over a three-year period (2013-2015).

To read more, or order the book, you can click here!


Ways Hospitals Can Control Costs

Ways Hospitals Can Control Costs

The first step is to understand your position. One of the things that can be very harmful is when a hospital tries to shave costs in an area where they are already efficient. That can be detrimental to both the hospital and patients.

The first critical pieice is to understand a hospital’s performance and find the places where they have an opportunity to reduce costs.

Once you find an area with room for approvement the next step is to identify what is driving that difference, That allows a hospital to determine how to approach the problem.

Is it a physican preference issue? A lot of care is determined by the physican’s protocol. When evaluating cost, are there phsycians that have a more efficient cost protocol than others?

Are you forgetting charges? Sometimes losses can be explained by something as simple as overlooking charges. For example, the presence of a charge for an injection, but not the needle, can compound quickly. These are great problems to find, because they are easily solved.

Physican preference

On a supply side, do phsycian’s prefer to use certain supplies that may be more expensive. There may be an alternative that is less costly. In some cases, this alternative has simply never been communicated to the phsycians, who continue to use the supplies they’re familiar with.

Certain physicans prefer to practice a specific way. They may want a complete set of lab tests upfront, while another may be more selective in their testing. These different courses of treatment can change a hospital’s cost structure.

Utilization is the use of a service. How many lab tests are being done. If you come in for pain and a doctor runs bloodwork. She may choose to be very selective in the test, while other may run multiple tests. That physician will show a higher cost of care.

Cost per unit is the cost of individual supplies. If the second physician in our example runs 3 tests at $50, while the first runs a single test for $50, cutting down on the number of tests may not actually positively affect cost.

This is one reason why it’s so important to analyze data thoroughly and from multiple angles. Although the answer may seem simple initially, it may be more complicated.

Market share

Enhanced market share often means increased volume. That allows hospitals to spread their costs around. For example, if you have to maintain a CT machine, but it’s only used by two patients, you’re going to lose money at that machine. Increasing your volume on the machine will help pay for maintaining it.

On the revenue side, it give you the opportunity to gain more revenue but it also gives you a stronger position with payers. A hospital with high market share has something to negotiate with when sitting down with payers.

You can increase market share through marketing or attaching well-known names to the facility. Of course, talented physicians with good reputations will increase volume. If the hospital is known for high quality it will drive people to the hospital.

Pricing will always play a factor with volume. If a hospital is known for being expensive, especially for certain procedures, patients will look elsewhere for treatment.

On the other hand, if a hospital is known for being cheap a patient may not trust them for a complicated procedure.

Plant age

Plant age is important because of the utility of the equipment and the usability, but it’s also important because of perception. If a community perceives a hospital as being outdated they may look elsewhere for their care.

Hospitals are trying to be reasonable with expecations and their ability to upgrade. The equipment that a hospital purchases today will be more expensive in five years, most likely. From a planning perspective, a hospital must remain profitable so that it can reinvest in those assets. Not only will they need to repurchase equipment as it breaks or is outdated, but the new equipment will likely be more expensive.

Even non-profit hospitals have to maintain a profit in order to continue providing the best care. Non-profit does not mean no profit. They have to remain mindful of their fixed assets.

Charge Capture and Coding

You don’t want to leave any money on the table. If you’ve performed the service you don’t want to leave anything on the table. The first step to this is identifying when things have been missed. There isn’t an organization out there that doesn’t have some charge capture issues. No one is immune.

That being the case, you need to identify where. We can help hospitals recognize when one service is connected to another. For example, if you run a lab test you need to get the blood out of the patient. If we see a test that requires a blood draw, but not a charge for a blood draw, we know there is a charge capture issue there.

The flipside of that are charges that show up by accident, like a test that wasn’t actually run. This can be an issue with audits, as well as being required to pay the money back.