When it comes to quoting accurate prices in advance to patients, hospitals are finding themselves caught in a double bind. On one hand, Medicare and some large insurers require hospitals to provide cost estimates for non-emergency procedures. That helps patients know in advance how much they will have to pay out-of-pocket. On the other hand, growing numbers of consumers want precise estimates of their care-in advance of their hospitalization.

Medicare and private payer requirements for accurate price estimates are the primary reason hospitals began boosting their capabilities in this area, But it’s today’s dismal economy, in tandem with the growth in consumer-driven health plans (CDHPs), that are causing more people to request estimates from one or more hospitals before they decide which provider they will use for their healthcare needs.

“People are always curious what they’re going to get billed, but they’re more finicky with their purses due to the economy,” commented Jennifer Sellers, Surgery and Financial Counselor at WestCare Health System. Sellers noted that her health system was experiencing an increase in surgery cancellations lately because people decide they can’t afford the surgery at this time.

Of course, where there’s an unmet need, companies will fill the gap. Thus, a fast-growing product category in healthcare are software systems and services that make it easier for hospitals to provide accurate, pre-service estimates to patients. Preferred Medical Marketing Corporation  (PMMC) is an example. PMMC’s Estimator Pro software quickly figures estimates using historical data and current reimbursement agreements, breaks down costs to deductibles and co-pays, provides a printed explanation, and figures installment payments.

WestCare implemented Estimator Pro for outpatient services at Harris Regional Hospital in Sylva, North Carolina. “We had really bad collections when I started here two years ago,” recalled Sellers, who noted that, before implementation of the new system, hospital staff arrived at estimates by simply averaging several previous surgeries together. “That wasn’t getting it for a lot people,” Sellers added. “This program cuts very close to the actual amount of the patient’s final charges.”

CDHPs, which include a combination of high-deductibles and health savings accounts or health reimbursement arrangements, grew 35% since 2005 and now represent about 6% of market penetration, according to a recent report from Corporate Research Group,  an independent research firm focused on managed care.

Palmer Hamilton, a Vice President at PMMC suggests that higher deductibles associated with CDHPs are motivating hospitals to get more aggressive about collections. That is one reason why they’re willing to spend $2,000 to $5,000 per month for Estimator Pro. Hollywood Memorial Hospital in Hollywood, Florida, implemented Estimator Pro for outpatient services about two years ago. It reports improved cash flow of $125,000 to $175,000 monthly and a reduction of bad debt by about 15% annually, representing $150,000 to $200,000 in increased collections. That’s a return on investment of about 400%.

For clinical laboratory administrators and pathologists, these developments are a reminder that both payers and patients are increasing the pressure on hospitals, physicians, and medical laboratories to be able to provide accurate cost estimates of health services to patients. In recent years, both Dark Daily and The Dark Report have called attention to products and services offered by some payers to enable real-time patient eligibility verification and real-time claims settlement.

Because clinical laboratories have limited access to patients, it is important that they have the capability to quote accurate prices at time of service-particularly in patient service centers when the patient shows up for specimen collection. Higher deductibles and co-pays will also be another reason for clinical labs and pathology groups to be effective at quoting accurate prices prior to service and collecting money from patients at time of specimen collection. – P. Kirk

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