With laws such as the “No Surprises Act,” government has thrown its considerable weight behind the pressure on payers and clinicians to give patients good-faith estimates of the total cost of treatment. According to Marcus Dorstel, VP of Operations at Turquoise Health, both payers and providers have struggled and invested large amounts of effort in meeting the new requirements.
Payers and providers who want to meet the intent of the law by adding up or “bundling” the many parts of treatment offer “service packages” that estimate what a patient will pay. These service packages get very detailed, because the institution has to consider many factors. What precise procedures are used for a common problem like knee replacement? Will the patient have to stay overnight? What pre-op and post-op care is required?
The payers and clinicians are accepting some risk in providing these packages, because patients deviate from expected courses of treatment. There is an actuarial element to the calculations, assuming that some patients will exceed the expected cost and some will cost less. For instance, the clinicians might estimate that a certain action must be performed 80% of the time to complete a procedure; in such a case, they can include 80% of that cost in that service package.
Because contracts are typically updated annually, each package must be prepared for changes in the environment and patient population during the contract period.
The calculations thrown together to comply with transparency laws are both inefficient and inconsistent because each hospital does it separately. The exact same procedure can have a different cost based on both clinician and payer.
Turquoise Health analyzes large amounts of health care data to help payers and providers do better pricing. I last covered this company last January in an article titled Activating Transparency in Health Care Pricing. The innovation I’ll cover today is standard service packages, which can remove much of the variation and inaccuracies in bundling. The standard packages can also save the institutions time and effort.
Turquoise drew on millions of files across the Internet with data about procedures and costs. They are constantly ingesting new data and aggregating it to generate updates to the packages. The packages’ web site advertises them as open source, but “open data” fits this service better because there is no source code to copy or change.
The database contains more than 200 packages at this point. The level of detail embodied in this work is illustrated by sample names such as “Insertion of Tunneled Venous Access Device – with Subcutaneous Port – Ages 5+” and “Draining or Injecting Medication into a Large Joint/bursa Without Ultrasound.”
More centralization of this type is required for both transparency and cost cutting in health care. Why couldn’t this initiative have been launched by the hospitals and payer, when they recognized that each institution was putting valuable clinical time and money into the effort?
Health care institutions can’t overcome their innate sense of ownership of data and lift their eyes from their own ledgers sufficiently to see the needs they all have in common. Turquoise has done a public service in launching standard service packages.
