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.
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.
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.
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.
Hospital and health system leadership teams now recognize the importance of a thorough post-acute care (PAC) integration strategy. Many of them are developing networks that integrate physicians and investing in population health analytics, positive steps towards value-based delivery. However, many of these organizations will not see the meaningful financial and patient care benefits of these initiatives for several more years. Given current market conditions, PAC integration is likely to immediately enhance the value of patient care and have a positive impact on hospitals’ financials in the near-term. Milliman’s Ed Jhu and Sean Slattery and Kurt Salmon’s Ross Armstrong offer more perspective in a recent Becker’s Hospital Review article.
Milliman today announced that its Hospital Performance Index (HPI) software, a benchmarking tool for payers and providers that uses statistical methods to identify opportunities for increased efficiency in patient populations, has added two new capabilities.
The first new feature involves observation status benchmarks, which have become more important over the last two years with the institution of the 72-hour rule. HPI can now produce national and regional averages for observation statistics, allowing for quick comparison of individual facilities to national, regional, and state norms. Custom reporting is also available. With such wide discrepancy in rates regarding observation status by facility throughout the United States, this tool can now shed light on the relative performance of every facility in the country.
The second new feature involves readmission rate benchmarks by diagnosis-related group (DRG). HPI now provides data on the relative readmission rate performance of each hospital in the country, information that is crucial for both hospitals and payers. This new feature will enhance the existing functionality around potentially avoidable admissions and potentially avoidable inpatient days.
“These additions to HPI were very much driven by market demand,” said John Cookson, a principal at Milliman. “Hospitals and payers want more and better data so that they can make smarter decisions, improve efficiency, and contain costs. Now that HPI has information on observation status and readmissions rates, they are in a much better position to accomplish those goals.”