Tag Archives: hospitals

New price transparency regulatory considerations for hospitals

As of January 1, 2021, regulations require U.S. hospitals to post to their websites all of their negotiated payment rates in one sprawling machine-readable file, although many hospitals may not meet the initial deadline. The aim of the regulation is to increase price transparency with the goal that such transparency will lead to increased competition, improved customer choice, and ultimately lower prices. There will be challenges, though, to extract useful competitive information from the files. This article by Milliman professionals examines those challenges. 

How will the coronavirus pandemic impact patients’ out-of-pocket costs?

The unique structure of the U.S. healthcare system means that the out-of-pocket costs for patients requiring hospitalization due to COVID-19 can vary substantially among those with different types of health insurance. In addition, costs to those of different age groups, living in different parts of the country, experiencing different levels of severity, or facing the illness at different times of the year will also vary substantially.

Although it is too early to analyze the healthcare cost data for those who have been treated for COVID-19 in the U.S., historical data from patients who have sought medical attention for influenza or pneumonia may be informative for understanding out-of-pocket costs resulting from COVID-19 treatment. The biological and clinical characteristics of COVID-19 differ from other respiratory infections, but the signs and symptoms that necessitate hospitalization and intensive care for severe cases of the disease are also seen in severe cases of other respiratory infections.

In this report by Milliman’s Stoddard Davenport, healthcare claims data from three large national research databases is used to investigate the variation in out-of-pocket costs for patients who historically experienced acute inpatient hospitalizations involving treatment of acute respiratory infections (pneumonia and influenza). In this analysis, the focus is exclusively on cases that required hospitalization.

Healthcare price transparency requirements and considerations

In November 2019, the Centers for Medicare and Medicaid Services (CMS) released a final rule establishing requirements for hospitals operating in the United States to establish, update, and make public a list of their standard charges for items and services they provide. The provisions of the final rule go into effect on January 1, 2021.

The lack of price transparency in the U.S. healthcare market is well known. There are several reasons that can make estimating costs before care difficult for consumers. One of the main challenges is the variation in billed charges and negotiated rates between insurance companies and providers. The majority of Americans have health insurance coverage through insurance companies (or payers), which negotiate prices with hospitals and providers. The negotiated prices between payers and providers have historically been confidential and subject to nondisclosure agreements.

Health economists and other experts believe that transparency in pricing is key to healthcare cost containment. Opponents of the policies adopted in the CMS final rule say that these requirements will impose a significant burden on hospitals and may lead to confusion without providing any relevant information.

In this paper, Milliman actuaries and consultants provide a summary of key provisions of the final rule that apply to hospitals, briefly touching on topics that require additional consideration by parties affected by the rule.

Is a diagnosis-related groups system on the horizon for Cyprus?

Diagnosis-related groups (DRGs) are the standard envisioned within the Cyprus General Healthcare System (GHS—or commonly referred to as “GESY”) as the process by which public and private hospitals will be reimbursed for their services.

As part of the GHS implementation, hospitals will need to employ a customised DRG system, with a catalogue of DRG codes and related definitions. It is envisioned that this will enhance efficiency in the delivery of hospital services, more so than other hospital payment models. In this paper, Milliman’s Nicholas Kallis considers the initial development of the DRG system in the United States to assess whether or not it’s worth implementing in Cyprus, and in what form.

This paper is the first in a series about DRG systems. The series will cover the definition and objectives of these systems. The papers will also explore how different nations have developed and adopted the payment mechanism and their main advantages and disadvantages.

Considerations for comparing 30-day unplanned readmission rates

Hospital readmissions can add unnecessary cost to the healthcare system and can adversely affect patient health. Readmission rates are key metrics for measuring the performance of hospitals, health plans, accountable care organizations (ACOs), physicians, and post-acute care facilities because they are tied to financial rewards and penalties for those entities. This article by Milliman consultants Maggie Alston and Michele Berrios identifies key elements that should be considered when evaluating readmission rates across populations or when comparing readmission rates with different methodologies.

Milliman RBRVS for Hospitals

The Milliman RBRVS for Hospitals™ Fee Schedule provides a simple solution for comparing hospital contractual allowed amounts, billed charge master levels, relative efficiency, and patient mix differences. The fee schedule is based on Relative Value Units (RVUs). There are several advantages of RBRVS for Hospitals. For example, RVUs have been developed for all hospital services, so they reflect the relative resources required to perform the care. Also, a single conversion factor can be used to benchmark a hospital contract. Milliman actuaries provide some perspective in this paper.