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Price Transparency: Legal Considerations for Healthcare Providers

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CMS’ Pricing Transparency final rule takes effect 1/1/21.

Are you ready?

James Cervantes, associate vice president at Jarrard Inc., Emily Jane Cook, partner at McDermott Will & Emery and Steven Schnelle, associate at McDermott Will & Emery, discuss the legal and communications aspects of the new CMS price transparency rule. They also offer actionable steps hospitals and health systems can take to prepare for the January 1, 2021 start of the rule.

Watch the video or read the transcript below.

Read the Transcript

Steven Schnelle: When thinking about the hospital price transparency rule, it’s helpful to remember that this requirement was actually first created in the Affordable Care Act in 2010. So this is a long standing requirement for hospitals to publish their standard charges. But we didn’t see the hospital price transparency rule come about until November of 2019, which seemed to have expanded in many hospitals eyes what the actual requirements are that were imposed by the statute.

When thinking about the legal implications and how we can focus on the legal analysis related to the rule, we want to think about how are we interpreting the rule. And ultimately, because the rule was promulgated by a federal agency, we’re going to be applying administrative law principles when thinking about the interpretation.

Another important point to think about from a legal perspective is that the rule doesn’t actually prohibit hospitals from challenging government enforcement actions in federal court. And as a result, if you do have hospitals who are challenging what exactly the interpretation of the rule is, then the ultimate interpretation will be a judicial or legal interpretation coming from a federal court. So for that reason, it’s pretty important to work with a hospital’s in-house legal team and work with outside counsel, as maybe helpful to think about what does the rule actually mean when looking at the language that’s created by CMS in the preamble, and how might a hospital make informed decisions regarding what charges they’re going to publish and how they’re going to publish those charges.

Emily Cook: An important factor in evaluating implementation of the rule, as well as the risk, is the enforcement landscape. CMS has developed an escalating enforcement framework based on the regulations. They have established three separate ways in which they will engage in enforcement.

The first is a warning letter followed by an opportunity for corrective action . And then failing implementation of that corrective action by the hospital, administrative penalties. The administrative penalties are $300 per day per hospital. There will be an opportunity to appeal any penalties that are implemented and those enforcement actions are expected to be made public.

It’s also important to consider the risks outside of those imposed penalties within the regulation, including what compliance may mean in terms of other contractual obligations for compliance with laws.

James Cervantes: In addition to the legal risks, there are very real reputational risks. Particularly if a hospital is the only provider in that market who chooses not to comply. Remember, the penalties will be made public. We anticipate local and national media outlets will be digging into the data to highlight any variations in pricing information, both regionally and even nationally.

Consider how your pricing relative to competitors will sit with patients and consumers. On the flip side, we believe this is an opportunity to connect with patients and consumers in a way that hospitals aren’t doing today. It’s an opportunity to educate your consumers and patients about the difference between price charge and the cost of care that they ultimately pay.

It’s an opportunity to articulate the unique value of services that you’re providing and why it’s worth receiving care at your facility versus someone down the road. Done right, you can set yourself apart from others and create a better understanding of not only costs, but overall healthcare value.

Steven Schnelle: If we were to think about three important notes for executives who are tasked with implementing changes for the hospital price transparency rule, our first would be to have a really clear sense of where the rule is clear and areas where the rule is unclear.

Many parts of the rule are unclear or give hospitals a fair amount of interpretive flexibility. And at the same time, the rule can present certain principles for application to particular facts. So while the rule may not be particularly clear, certain principles can flow through and have a…present a certain rationale .While at the same time, it can be challenging because this rationale may not align clearly with the actual intent of the rule that is to make hospital costs more transparent to users – in other words, to patients who are coming to the hospital or considering coming to the hospital. In areas where the rule is unclear, or it gives hospitals interpreted flexibility, we recommend establishing your hospital’s interpretation in a written document.

This could be a policy and procedure document, and we would suggest that you include in this document any rationale that you’re using in interpreting the statute regulation and CMS’ sub-regulatory guidance. We would also recommend that these particular policies and procedures are applied consistently. This document can be utilized in various circumstances to support your hospital’s position.

James Cervantes: We couldn’t agree more that having policies and procedures in place is important.

We would also recommend having very clear language around what pricing information includes and, more importantly, what it doesn’t include, so patients have a very clear understanding of their insurance coverage, copay, deductibles, et cetera, influence their out-of-pocket costs. And that the price they see online is just one part of that.

Having clear disclaimer language should also be visible on your website and your price estimator tool, or any application that you use today to communicate with patients around the price information they see.

Steven Schnelle: And then we’d also recommend that you pay attention to legal developments as time goes on surrounding the rule.

CMS has continued to release guidance regarding interpreting the rule, and its regional offices are continuing to hold webinars for providers who are trying to wrap their heads around what the rule means. There’s also ongoing litigation related to the rule that will be important to follow. And we expect the contours of the rule are going to develop as CMS sees how different hospitals are interpreting the rules, requirements and response to those interpretations.

James Cervantes: While the legalities are sorted, we know that based on a recent consumer survey, we feel that patients are more likely to source price information by calling their doctor than searching on a hospital website or even calling their insurance company. This tells us that regardless of any outcome of the rule or litigation related to the rule, hospitals still need to be prepared to communicate price information to patients and consumers who are shopping for this information today.

Hospitals and providers who go further than just publishing the required data, those who simplify the complex and foster patient understanding and interaction and build connectivity, we believe will reap an advantage. Because even though a medical professional’s advice is the best influencer on consumer choice, we know that cost increasingly matters.

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Part 2 – The New Healthcare Marketing: Precision-Based Execution

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In an earlier post, nationally recognized healthcare marketer Reed Smith teased the need for healthcare marketers to drive engagement through precise targeting. Smith is a 20-year veteran of healthcare marketing and digital innovation who serves as Jarrard Inc.’s vice president of digital strategy. We asked him to get deeper into what precision-based execution means and some specific tactics for giving it a go.

Jarrard Inc.: Explain what you mean by precision-based execution

Reed Smith: It’s about avoiding broad digital marketing campaigns. Of course, sometimes you do need to go broad with, say a general brand awareness campaign. But for the most part, when you’re thinking about service line marketing, service line growth or patient acquisition, you need to be going after very specific people. And some of the typical approaches – like running radio ads – may not make sense.

JI: Has the need for or anything about this rifle approach changed over the past few months?

RS: The last eight months have created some interesting nuances. Think about the flu shot. We’re focusing on everyone getting a flu shot going into the winter, so that’s tens, hundreds of millions of people who need it. But providers can still be very specific about the messaging they’re using. It’s not, “Hey, everyone needs to get the flu shot.” It’s differentiating between and speaking directly to moms with kids at homes or empty-nesters or teens.

All of that is going to weigh into where you get the shot, the message that you hear convincing you to get it, the medium used to deliver that message – is it a video or a photo an ad on the local public radio station?

JI: We also know the messenger is critical. How do you combine the right precision-based message with the right messenger?

RS: With digital tools, we have a true opportunity to bring that message to the right people via the right messenger in fairly straightforward ways.

People want to hear from physicians, nurses, therapists, APPs and other caregivers. Once provider organizations have identified those people, digital channels lend themselves to expertise and thought leadership. Think about all the live content we see on Instagram or Facebook or YouTube. People are already accustomed to these types of environments because they’re already doing webinars and taking to other leaders through Zoom.

JI: But are people going to see that content?

RS: Historically, we’ve seen mediocre organic performance on social channels. Healthcare marketing has had to push pay-for-performance if we wanted anyone to see our content. But a side effect of COVID-19 is that we’ve gotten a lot more traffic to our sites because people are looking for medical information they can trust, and providers have been sharing it. We’re seeing a wave of organic traffic. Now we need to leverage that opportunity.

JI: Whether a provider feels behind or keeping pace with digital, how do they grab the opportunity you just mentioned? For example, do they just start doing Facebook live or take a more measured approach?

RS: Historically I’ve been a heavy proponent of “proceed until apprehended.” But it’s important to put some nuance on that. When it comes to digital marketing there’s value in trying things out, beta testing new approaches to figure out how useful they’ll be. You mentioned Facebook live. It’s hard to understand the ins and outs and how useful it’ll be without just using it.

But ultimately, you need to think through a strategy and a plan before you get too far down the road. Healthcare marketers need to answer the question about what a new tactic means for the organization – both strategically and tactically. The other issue to keep in mind is the politics. “If I do something with one physician, does that affect another physician?” Overall, though, if you have an understand of what’s going on across the organization and have built enough credibility to get permission to test and tinker, it’s great to get into the lab and figure out what works.

JI: What else have providers learned over the past few months?

RS: What I’ve found interesting is the expectations around virtual care and other alternative delivery methods. We’ve talked a lot about telehealth and how people have experienced it and loved it. But think, too, about drive-through testing for COVID-19. That’s all in place so drive-through flu shots wouldn’t be a stretch, right? So, organizations have an opportunity because the baseline has been reset.

If you want figure out how your organization stacks up when it comes to digital maturity, check out our 28-question, 15-minute Digital Maturity Survey. You’ll get a complimentary scorecard and benchmark against industry averages.

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The New Healthcare Marketing: Measure Twice. Improve Once.

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We’ve long said that measurement is one of the consistent deficiencies we observe when it comes to healthcare marketing. We’re typically referring to marketing analytics – reach, engagement, reputation, etc. when we say that. But what really needs to happen is that we measure, well, everything.

Providers today must have a baseline understanding of where they are today so they can either consolidate recent gains or make adjustments based on existing deficiencies (or both). A recent McKinsey study suggests that adoption of digital tools by consumers and businesses has vaulted forward five years in just a few months. It’s happened in healthcare, largely with telehealth. But we have to go deeper. It’s not just spooling up new platforms. It’s ingraining digital thinking into the organization’s psyche, getting buy-in from leadership, making targeted investments in tools and people, and yes, measuring the crap out of everything.

It’s also about setting expectations for what digital thinking can do for healthcare providers. This is where providers are lagging. In our conversations with clients and friends from a variety of healthcare provider organizations, we’re repeatedly hearing that people simply don’t have a great understanding of what the expectations for digital are or should be.

To set those expectations, you have to be able to show what digital can do for your organization. But it’s hard to show what digital can do without having the infrastructure in place to do it.

The fix? Instead of going for the homer, swing for singles and doubles with things like:

  • Listing management
  • Scheduling tools
  • Patient portals
  • Chatbots for frequently asked questions

These are all easy to identify. Not always simple to execute, but manageable. For example, since you want people to find the right information when they search for you online, start with that foundational piece. And if you want people to schedule care at their (and your) convenience, look at online tools.

Let’s be clear: This isn’t optional anymore. Since March, the pandemic has forced providers to get those foundational pieces in place. So much care moved online during the pandemic, and we’re still waiting to see what the new equilibrium looks like. As patient expectations have shifted even more towards digital options, providers desperately need to invest in getting the basics right – even though doing so will take some work.

Aside from being the right thing for patients, it’s important for marketers to think big but act small. You need to know what marketing can do for your organization and what digital tools can do for your marketing. That’s the big thinking. But none of that can happen without the day-to-day execution. Ultimately, it’s about people. It’s too easy to get lost in some of the bigger ideas, which just leads to frustrated consumers, distracted marketing teams and dead ends for everyone. Realistically, we have to focus on connecting with narrow groups of people, driving engagement and helping them find solutions to specific needs.

That’s where precision-based execution comes in. More on that soon.

In the meantime, if you want figure out how your organization stacks up when it comes to digital maturity, check out our new 28-question, 15-minute Digital Maturity Survey. You’ll get a complimentary scorecard and benchmark against industry averages.

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Lights, Action and the Theater of Safety

The inside of an empty vintage theater

Now is not the time to be subtle.

Fear of the novel coronavirus is as intense as it was this spring. Almost 80 percent of people are afraid they or someone they love will get COVID-19, according to a national consumer survey Jarrard Inc. recently fielded in August.

To be blunt, Americans just don’t feel safe. When we asked how safe they’d feel seeking medical care, the answer was, basically, “Not very.” Whether a doctor’s office, hospital, outpatient surgery center, ER or urgent care center, people rated their feelings of safety no higher than 5.8 on a 10-point scale. (If you’re wondering, urgent care rated the lowest at a 5.0). One in four people rated their feelings of safety at a three or below in our August survey. Not good.

And not much better than the results we received in our first consumer survey back in April.

It seems we have lost some momentum.

Think about it. When providers started reopening services this summer, the entire industry was talking about what people needed to hear from provider organizations. Everyone knew about safety concerns. But what seems to have happened is that too many providers created the safety messages, checked the box, reopened their facilities and said, “We’re good to go.” And with volumes coming back, it seems like it was successful.

Digging deeper, though, that strategy doesn’t appear to have worked. Our August survey asked how long people would wait until seeking various types of medical care. Short answer: Unless they really need it, they’re probably not going to come back for around six months, maybe longer. That’s also no better than in April.

What we need, right now, is a bit of theater.

Theater, not because it’s fake. But because it’s visible, clear, obvious. And it makes you feel something. Because people want to see, hear, smell and feel what you’re doing to keep them safe. We asked people what they need to help them feel safer interacting with healthcare, outside of a major decline in COVID-19 cases or a vaccine. Their top answers were:

  • Screening everyone as they enter a medical facility.
  • Masks on everyone.
  • Enhanced cleaning procedures.
  • Isolating COVID-19 cases somewhere else.

In a vacuum, it would be easy to lean back and think it’s okay to stop your entry checkpoints. The CDC says it doesn’t make much of a difference, so why do it? Two reasons.

First, when it comes to healthcare, we know that people don’t seek out information until they need it. People aren’t thinking about the safety messages you put out two months ago. You have to keep those safety messages top of mind. You have to make sure your website and social channels still have information about what you’re doing to keep people safe.

Second, people want to see activity. They want to be a real-time witness to your extensive precautions.

The key point is that there’s a difference between actual safety and how people feel about safety.

Yes, you have to provide safety – this is theater, not a Potemkin village. That means going above and beyond, not stopping at “just enough.” Whether the CDC says temperature checks are effective or not, seeing those checks provides a feeling of safety. So does seeing environmental services wiping down public areas and front desk staff saying, “Here’s a pen that I’ve just sanitized for you.”

Now take a step back. The theater of safety should start even before someone gets to that temperature checkpoint. Providers need to be showing how they’re keeping people safe, so that they feel safer about making an appointment in the first place. That means resisting the urge to demote safety information on your website. Keep it front and center. And the same goes for social media. Proactively share safety measures when people call to schedule an appointment. Even though it’s added work for your scheduling and nursing teams, there’s a lot to be said for continuing those pre-appointment safety calls. In our observation, those brief calls have helped patients realize, “Hey, they’re thinking about me. They’re working to keep me safe.”

All of those things create the theater of safety.

It’s a little cliché in the “consumerism of healthcare” and “patient experience” worlds to point to other customer-facing industries for examples of what healthcare could/should/would be doing. But other industries are creating the theater of safety better than we are. Consider these examples:

  • Southwest Airlines is doing a fantastic job. They’ve just informed customers that they’re keeping the middle seat open through at least October 31. When you board a Southwest plane today, you can literally smell the cleanliness.
  • Savvy grocery chains like Trader Joe’s have stationed an employee at the store entrance who hands you a cart and says, “This has been sanitized for you.”
  • Even actual theaters – movie theaters – are reopening and publishing extensive plans and guidelines. So far, it looks good on paper. The proof will be when we walk in and can enjoy the full two-and-a-half hours of Chris Nolan’s latest masterpiece. (I’ll be there this weekend.)

Know that this can be done – and really must be done. In the end, it’s a great opportunity for healthcare providers to reframe their thinking and keep a good thing going. After all, the show must go on.

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How will Health Systems Deal with a COVID-19 Vaccine?

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As opponents build their case, providers risk reputational damage if they don’t take a point of view.

Early in the COVID-19 era, sometime after Bargaining and Depression, Acceptance began to set in.

With it came the grim realization that we wouldn’t fully leave this era until there was a widely available and reliable COVID-19 vaccine. And we were told that cavalry wouldn’t be rolling in until early 2021 at the absolute soonest. Now here we are, months later, still in suspended animation and confronting another major question:

What if there’s a reliable vaccine, and people refuse to get it?

Our recent national consumer survey shows that just 53 percent of Americans are extremely or very likely to get a COVID-19 vaccine. Now, there’s a lot we don’t know about an eventual vaccine. But we do know two things:

  1. The public overwhelmingly expects and trusts healthcare providers to actively talk about healthcare issues, which includes educating about the coronavirus and encouraging people to take specific actions to protect public health.
  2. The looming war on vaccines will make the masking battles look like tickle fights.

Six months ago, no one cared about the idea of wearing a mask. The idea that it could become a major political signifier would have seemed absurd, even for these absurd times. But as we saw, the issue quickly took on major cultural importance for months before we settled into our current détente. Some of the political air has left the balloon. Most people have accepted their masked fate, while the holdouts remain largely unpersuadable.

There are several significant differences between masking and vaccines, with the most obvious being that one is gently draped in front of your body and the other goes directly into it (via needle, no less…shout out to my fellow trypanophobiacs!). There’s also the fact that suspicion about vaccines has steadily risen over the last several years, long before COVID-19 swept the land. Some groups, particularly marginalized groups with unpleasant histories of medical trials in this country, have every right to be wary. Then there are the Jenny McCarthys of the world, whose rationales are less reasonable but even more, uh, viral.

So, are we telling you that you have to mandate vaccines for all your employees and aggressively promote the vaccine’s efficacy to the public? We are not.

However, as the trusted voice on healthcare in your community, healthcare leaders have an opportunity and a responsibility to educate the public, starting with the people who work within your organization.

Of the 47 percent of the public (and 40% of healthcare employees) who are hesitant about taking the hypothetical vaccine, the overwhelming majority are either worried about the potential side effects or worried about getting infected from the vaccine. These are very reasonable concerns about what is likely to be the most quickly developed vaccine in history. They are also an opportunity for health systems to leverage the trust the public has invested in them in a way that answers the public health concerns they seek.

Broad education on vaccines must start now, while clarifying that specific instruction on what to expect from a COVID-19 vaccine will come later, when we have the appropriate information. Don’t take for granted that everyone understands how vaccines work. Hypothetically, there could be a communications consultant who’s worked in healthcare for years but is just learning today how they actually work. Hypothetically.

Both now and later, explain how your organization will evaluate any vaccine. Make it clear that you won’t just be pulling syringes off an unmarked van and administering them to patients. (You’re not going to be doing that, right?) By explaining the process, we can begin to socialize the idea that any vaccine that comes our way will be thoroughly reviewed for safety and efficacy – “Operation Warp Speed” notwithstanding.

This is a major challenge, and it’s one that many health systems would prefer to avoid. It is an instantly political issue which will be further politicized and weaponized in our dismal national discourse. While it may not feel like it, the far greater reputational risk lies in health systems not doing everything they can to get responsible, timely and accurate information out to the public. As we continue to confront the greatest public health crisis this generation has seen, shrinking from the moment is a guaranteed way to lose the trust you’ve built.

What is your plan? You don’t have an option to sit this out, so you best start preparing one now.

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