Episode Transcript
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CJ Wolf (00:00):
Welcome, everybody, to
another episode of Compliance
Conversations.
I am CJ Wolf with Healthicity,and today's guest is Dave
Cardelle.
Welcome, Dave.
Dave Cardelle (00:11):
Great.
Thanks, CJ.
Great to be here.
CJ Wolf (00:13):
Yeah, we're glad to
have you back.
Dave's been on a previousepisode.
So if you like what he has tosay here, you should go find
that other episode.
And I know you will like itbecause he's got a lot of
knowledge and a lot ofexperience.
And I think we have a goodtopic today.
But Dave, before we jump intothe topic, why don't you tell
the audience a little bit aboutyourself, what you do?
Dave Cardelle (00:34):
Sure.
Thanks again, CJ, for havingme.
My name's Dave Cardelle.
I'm Chief Strategy Officer atAMS.
We're a software company, ahealth affordability platform,
software that does a lot ofthings, mostly around payment
integrity, risk management, andbusiness intelligence.
We serve not only health plans,but we also serve hospitals and
(00:57):
the provider community withsome of our solutions, and one
being, for the topic of the day,price transparency.
transparency software.
So I'm a pharmacist byprofession, but I've been in the
payment integrity and pricetransparency space for many,
many years now.
So really excited to kind ofshare some of the insights.
I'm also on the Self-InsuredInstitute of America or SIA
(01:21):
price transparency committee.
So we do a lot of lobbyists andlegislative activity to try to
improve the price transparencyon both sides for both hospitals
and for health plans.
CJ Wolf (01:33):
Yeah.
So I was actually at aconference recently with Dave,
and we were talking about this alittle bit, and we thought this
would be a great topic.
And a lot of our listeners arecompliance officers, right?
They're in the hospital space.
And so most of them know, thecompliance folks know, that
there's requirements for pricetransparency.
(01:54):
Why don't you give us just alittle bit of background of how
this came up?
It's been around for years, buttell us a little bit just...
setting the stage backgroundwise?
Dave Cardelle (02:03):
Sure, yeah, let
me set that stage because it's
kind of an interesting history.
It started with the previousTrump administration about a
little over four years ago whereCMS put out a final rule for
hospital price transparency orHPT and on the health plan side,
(02:23):
transparency and coverage orTIC, T-I-C.
And those requirements, youknow, were seemingly
straightforward, but there wasvery little, if any,
standardization requirements.
It was super confusing,especially for the hospital
community.
Over 6,000 hospitals wereaffected by this.
(02:43):
And for the first time everhaving to report what has been
considered confidentialproprietary rate information.
So this was a big deal.
And about four years ago whenthat came out, there was just a
lot of ambiguity and no realguidance as far as the file
structure, the data elements,the data layout, the media to
(03:08):
use to put that massive amountof data.
And it really did put a burdenon hospital specifically to have
resources and technologychanges and kind of create these
files in a way that would becompliant.
I think probably a lot ofhospitals had to use some
consultants and spend quite abit of money to get the these
(03:31):
things together.
And even today, four yearslater, because of the lack of
planning of interoperability,there were files that had been
submitted all different ways,which makes it almost unusable
and requires companies likeourselves and other analytics
companies, we're not the onlyone, to try to marshal that
(03:51):
data, do a lot of curation andmapping and cleaning of that
data and identify what's good,what's bad.
There is a lot of missing dataand I could get into that a
little bit, but superchallenging for hospitals to
comply with this.
And it's gotten betterprogressively over the four-year
period that we've observed, butthere's still a lot of holes
(04:13):
and i think what's important fortoday's discussion is cms now
with the new administration uhthey're doubling down uh they're
kind of revisiting this andsaying okay it's been four years
we are going to start to reallypenalize and find uh
non-compliant hospitals.
Now, the same is being saidover on the health plan side,
(04:34):
and that's kind of a little bitof a different issue.
But I think for this group, atleast, you know, we can spend a
little bit more time on some ofthe things and nuances and new
requirements and the new way theadministration is really going
after, you know, the hospitalprice transparency compliance
side of this.
CJ Wolf (04:53):
Yeah, and I was reading
a little bit on the HPT website
for CMS that about enforcement,kind of their enforcement
strategy.
And they say, I don't know howaccurate this is, but they say
in one of those paragraphs thatpreviously they were doing about
30 to 40 reviews per month, andthey're using automatic,
whatever that means, automaticsystems, and they're up to 200
(05:17):
reviews a month.
And that means each 200hospitals, if I understand that
right.
Is that your understanding?
Dave Cardelle (05:23):
Yes, they have
increased their auditing and
their review of the files.
They put out a validation toolto help, but it's still pretty
ambiguous and there's still alot of confusion.
And I think what's happening oris going to happen, but hasn't
happened yet, there's anincrease in activity, but the
(05:46):
penalties have not really hithard yet.
And I think they're planning onthat.
And I think one of the thingsto start out with is to really
what the risk is for hospitalsfor noncompliance.
And we can talk about wherespecifically some of the
noncompliance is, because weanalyze that all the time.
We kind of have a perfectblueprint for every hospital,
(06:06):
6,000 hospitals, because we takein all these disparate files
and we do a lot with them.
And We analyze them forquality.
and quantity of data that'ssubmitted.
And we look for outliers andanomalies and things that are
errors and we clean that up.
So we kind of have a perfectroadmap for every hospital today
as a by-product of our usecases for it.
(06:27):
We kind of know where thingsare good and bad and there's
some really good stuff that'sbeing reported.
And then there's like some realvulnerable areas specifically
for hospitals where they'regonna get a poor grade and where
they could actually get finesimposed.
The fines are prettysignificant.
And if you look at it from thisadministration, not only saving
(06:48):
money, but almost as a revenuegenerator, there's a little bit
of a potential motivation therebecause the stakes are high.
At $5,500 a day potential finefor a hospital, that can add up
to over $2 million per year fora hospital, which all said could
be $12 billion in revenue forthe government or CMS into the
(07:12):
trust fund.
you know, there's a lot atstake here.
And I did a little bit ofanalysis that I thought was
interesting.
I kind of, you know, figuredout with existing staff on the
compliance teams withinhospitals today, and these are
rough estimates, but, you know,it may cost a hospital between
$250,000 to $500,000 to get adedicated lead resource that
(07:34):
does this full-time, that kindof leads the internal teams, and
then a kind of aninterdisciplinary team across
different business units thatshould be represented.
Those are existing existingresources, but all said, you
know, with IT and everythinginvolved to do this, it's
probably between a quarter of amillion to a half a million
dollars, you know, and tomitigate the risk of potentially
(07:56):
$2 million.
But there's more than just thefinancial side of it.
There's also, I think, justbrand, image, marketing, payer
relationships, governmentrelationships.
There's a lot of other thingsthat are at stake that I would
say, you know, also you know,support the need to really try
to get compliant for a lot ofgood reasons and to be more
(08:18):
competitive because with good,accurate, data you're now able
as a hospital to look at whatthe competitive rates are and
find where you may be underpaidand where you can maybe increase
those rates so it works on bothsides of the coin i think it's
really important to say you knowchange the mindset instead of
trying to be obstructive withreporting this data i don't
(08:38):
think anybody is but theinherent nature of how confusing
it is getting really clear onhow to provide the information
that's requested keeps youcompliant you know mitigates the
risk the two million dollarspotentially but it also enables
you to do a lot of things wherejust improving a few contracts
you can make up for that moneypretty quickly
CJ Wolf (09:00):
yeah so why don't you
just kind of quickly tell us
what's required i myunderstanding is You know, you
have to have a singlecomprehensive machine readable
file with all your standardcharges.
And then secondly, a consumerfriendly kind of display of
standard charges for what theseare shoppable services.
Do I have that right?
(09:20):
Is there more required or tellus what you know?
Yeah,
Dave Cardelle (09:24):
they've kind of
added, they've been adding
addendums to this final ruleover time and you hit the nail
on the head, but they are alsolooking at things this last
round to improve as well fromthe things that they've seen.
So the first is Chargemaster,your CDM.
It's all electronically tied tobilling.
Your Chargemaster is the listprice.
(09:45):
It's pretty straightforward.
Nobody really pays that, butit's a kind of line in the sand
baseline for fee-for-servicediscounts which is the
percentage off billed charge.
So your CDM should equal yourbilled charge that appears on
claims that are being billed.
Otherwise, there's a problem.
And we have seen that problemin real life where there's, you
(10:06):
know, to the penny, you know,the thousands, tens of thousands
of different items that couldbe charged on a charge master or
menu list price.
sometimes are appearing 400%higher than what that charge
master is as a billed charge.
Now those are few and farbetween.
It's probably about 4% of allthe charges that we've analyzed
(10:28):
and we've analyzed a lot onactual claims data, but that has
hundreds of millions of dollarsin discrepancy.
So right there, you know, notonly CMS compliance fines and so
forth, but from a paymentintegrity perspective, those are
things that could be zeroed invery easily by health plans to
say, Hey, you know, you owe usthis money because your bill
(10:48):
charges are inflated compared towhat your menu says it should
be on fee-for-service claims.
So that's the one, but that'sactually what I call is a source
of truth or a pillar of truthbecause almost all the hospitals
are reporting very good dataother than the few percentage
that I just mentioned.
Getting the charge master datashould be pretty straightforward
(11:09):
and easy to report and updatethat accurately.
The second thing is kind of offof that, the discounted cash
price for an uninsured patient.
And originally it was 300shoppables.
You know, it's basically, andthere's some nuances to it, but
it's really around the topprocedures that you're
providing.
They wanna know what are thediscounted cash prices for the
(11:31):
services that you actuallyprovide in volumes.
It makes sense, common sense,right?
So this is something that onceyou put that in the machine
readable file, and you mentionedthat it should be in an easy to
read or access file on awebsite so that patients can
shop.
If they need a total knee orelective surgery or some other
(11:51):
procedure, and they want to lookat three or four hospitals in
their general vicinity, they cango in and research each website
for each of those hospitals andfigure out approximately what
those costs are going to be foran uninsured cash customer.
Now, that also equates to aout-of-network where a patient
(12:13):
may have coverage or insurance,but they're not contracted or
covered under your particularfacility.
So that cash prices, discountedcash price is really important
because that's kind of likesaying to the universe, now that
it's posted in MRF, this is theprice that we're willing to
accept as a hospital to provideone service to one patient.
(12:33):
So to me, that's an even betterbenchmark of what the price
really is.
And what I have also noticed CJis that most hospitals, if not
all, it's usually at 20% orwhatever that percentage is
doesn't matter.
It's usually pretty consistent,not only for the 300, but it
flows through to just aboutevery procedure.
So it's kind of across theboard discount off of that list
(12:55):
price or bill charge, whichequals your charge master.
if that makes sense.
The third one, just to get thatout there, because I think it's
important, and this is whereeverybody's vulnerable.
So those two data points arepillars of truth, source of
truth that can be relied uponfor the most part, except for
those few variances that I thinkcould easily be fixed.
(13:16):
But the third one that's in therequirements for the final rule
is what's giving everybody aproblem and where almost
everybody's non-compliant.
And that's the averagenegotiated rate by payer, by
line of business.
And there's a good reason whythat's a really tough one for
hospitals to report.
First of all, it's off ofutilization data.
(13:37):
And so if you think about itfrom a practical standpoint,
which I don't think went intothe thinking here, is that a lot
of hospitals specialize incertain things and they don't do
a lot of other services.
And they may have differentgeography where they may have a
small population of Aetna,Cigna, United, and a high
concentration of Blue Cross typepatients.
And then there's differentlines of business, HMO,
(14:00):
Medicare, Medicaid, PPO,commercial, what have you.
So those different lines ofbusiness are complicated by the
different health plans and theirpatients and members that are
going to that hospital.
There's just not a lot ofvolume of a lot of procedures,
if any.
So there's a lot of blanks andin those blanks, hospitals have
(14:20):
been reporting a nine, nine,nine, nine, nine, et cetera, as
a miscellaneous or junk codewhen there's no data.
And so that has caused aproblem where now in the new
requirements that's banned andthey're requiring hospitals to
put an estimate if there's nodata, which means like, how do
you do that, right?
For an average negotiatingprice, if you don't have it for
(14:42):
that line of business for thathealth plan.
So then you have to putcomments as well.
well so that the reader canunderstand how you came up with
that estimate and what it'sbased on.
If you have one incident, thenyou put that price point or
average negotiated rate, andthen you put the narrative that
explains that this is one pricepoint for that.
(15:03):
Or if there's multiple, you putthe range and you put the
number of incidents.
So they're asking for a lotmore granular detail to try to
get rid of these miscellaneousprices and to get to actual
estimated prices rather thanpercents or 999s or blanks.
And that to me is still a realproblem because of the lack of
(15:26):
utilization.
It's not coming off of contractpaper that says this is the
average negotiated rate.
It's coming off of actualclaims data, which is the ERA or
the 835 data.
So, you know, for hospitals andcompliance, I would advise as a
tip is to get a real goodhandle on that 835 ERA data and
(15:48):
segregate that pipe of data andinformation and parse it in a
way that you can actually do themetrics, replicate that in a
scalable way so that you cancomply with what's required.
So really focusing on the 835,I think can help, even though
it's, you know, in my mind, it'svery partial data.
There's a ton, every hospitalhas tons missing data.
(16:09):
And so theoretically, 6,000hospitals times $2 million,
that's $12 billion in potentialfees that if they decide to go
after that aggressively, youknow, could be a real issue for
hospitals.
CJ Wolf (16:23):
Yeah, that's so
interesting.
I want to ask a follow-upquestion to that, but we're
going to take a quick break andwe'll be right back, everybody.
Welcome back from the break,everybody.
Dave, I wanted to follow up onwhat you were just talking about
before the break.
A couple of questions.
(16:46):
The first one is, are theysupposed to give like a line
item estimate?
Let's say it's an outpatienttotal knee replacement or
something like you were saying.
Are they supposed to give anestimate for that?
Or are they supposed to includelike supplies and...
you know, number of minutes inthe operating room, because
(17:09):
that's going to vary, right?
When they give a price for thatprocedure, is it supposed to be
an all-inclusive price?
So that's a great question.
Dave Cardelle (17:19):
So what you're
talking about is really bundled
procedures.
And that's another flaw andanother concern and challenge is
because those bundles, youknow, the average patient
doesn't understand what allthose different things are
individually.
Exactly.
So what I would say right nowis get compliant with the
individual, with everything onyour charge master from a fee
(17:41):
for service perspective.
Also, from a place, that's agood question because now you
have to be specific on the placeor the care setting, inpatient,
outpatient.
And you also have to bespecific against that line of
business for each and every oneof those items.
And if it's DRG, put your DRGindicator, or if it's CPT, or if
(18:06):
it's HCPCS, there hasn't beenreally good compliance at all
with that level of granularity.
So think about it as a lineitem repricing, There's gonna be
a lot of repetitiveinformation, but make sure that
you line item these things outif you can at the CPT, designate
exactly what that price relatesto because a lot of the
complaints are, hey, DRG pricinginformation is non-existent or
(18:32):
JCODE and there's some newrequirements around that stuff
too.
CJ Wolf (18:35):
Yeah, because I'm just
thinking, because I've gone to
hospitals' websites and theyhave all these disclaimers on
their price transparency pagewhere it says, these are listed
by item, but each individualpatient might have variation in
price depending on how long thesurgery takes or this or that.
(18:56):
And not every charge on thecharge master even has a code.
So that's an interesting kindof scenario.
The other thing I wanted to askis talking about if CMS is
doing reviews for compliance, mysuspicion is they're probably
just doing the low hangingfruit, which is, do they have
the file?
(19:16):
Is it readable or not?
They're not necessarily doinglike a full audit, whether that
data is correct, are they?
Dave Cardelle (19:24):
Well, that's a
great point.
So for the last four years,folks have really complained
that they're getting, you know,hospitals are getting away
because it's like they justposted garbage file that doesn't
mean anything, you know, orthey post something with like a
billion files that are reallyhard to curate.
They've therefore postedsomething.
And that's where the industry'sbeen.
(19:46):
There's only been somethinglike 17 real penalties and
letters, even though there'sbeen a lot of reviews and a lot
of corrective action plans.
But at the end of the day, it'sbeen very nominal.
And I think that where thingsare changing and they're getting
much more aggressive.
They're doubling down andthey're going to start to get
into the weeds on the complianceside.
Now, I don't think they'regoing to go after the bundles
(20:07):
because it's not required atthat level.
You know, AMS, not to give aplug, but we actually do the
work to try to bundle thosetypes of common procedures
because we know clinically whatare involved.
For the most part, we can givenice ranges, but we're a
software company.
But the MRFs, no.
That's not something that Iwould worry about.
What I would worry about moreis that average negotiated rate
(20:31):
by place of care or setting byline of business and by code.
I mean, if you can get that offthe ERA and then put the
comments that indicate the basisof that and put estimates,
never put a percentage or a 999,that's going to satisfy, I
think, to the level of auditingthat they're going to do, you'll
(20:54):
be in way better shape thatway.
CJ Wolf (20:56):
And does that, you
know, having worked in a
hospital and we're updating thecharge master all the time, how
do you then update that whenprices change?
Best practice, you'd thinkthere'd be some sort of
automatic, you know, if I justchange these 2% of my charge
codes this year, but not all ofthem, how do I just get those
changed in the file?
Do you have any thoughts onthat?
Dave Cardelle (21:17):
Yeah, that's a
great question.
There is version control.
So what they're requiring andreally the best way to do it is
put a version control on that sothat there's a reference as to
this file is the most updated.
And so historically, AMSarchives and we keep all of
those historical files so we cansee the changes from version to
(21:38):
version.
From a compliance issue, it'ssuper easy.
I can run data right now for6,000 hospitals and say, X
percent have not sent in a newversion.
They sent one a year and a halfago.
And so, you know, that could bea very easy thing to audit,
right?
So making sure that you'resubmitting, you know, your
versions when required, yourupdates when required, I think
(22:00):
is just another one that theycould easily audit if they go
there.
So keeping up to date is goingto be really important.
And having around that and, youknow, a plan around it
internally with theinterdisciplinary group of folks
from, you know, the differentparts, not just compliance, but
all the differentrepresentatives, I think a task
(22:20):
force or committee is reallyimportant for folks to really
get around this.
CJ Wolf (22:25):
Yeah.
So how is AMS getting thesefiles?
Are you going out to eachhospital's individual website,
or is there a central placewhere all of these are?
There's no central place.
We
Dave Cardelle (22:35):
become the de
facto centralized place and
companies like us, not just us,but we have to go out.
It's heavy lift.
It's a lot of data.
It is massive.
It's probably the largest data.
In fact, the health plan datais even bigger than the hospital
data.
And we keep both the tick MRFsand the hospital.
So collectively to give bothsides of the coin, because on
(22:58):
the health health plant side,they actually have the average
negotiated rates by line ofbusiness much more cleanly
because they're not doing it andthey have any volume and they
have paper.
So they're able to report that.
So if as a consumer or formyself, I look at this and say,
hospitals have really solidinformation that's usable and
(23:21):
trusted for charge master anddiscounted cash price over here.
On the other side of the corn,I want to go to the tick to get
the average negotiated rate sothat you can see the competitive
prices between Aetna, Cigna,and others at any one hospital.
And our software kind of doesthat and makes it easy, but it's
not easy to do.
CJ Wolf (23:38):
I gotcha.
Yeah.
So from a compliancestandpoint, you mentioned that
there have been some reviews.
And as I understand it, I wason their website this morning,
and they published those reviewsby hospital.
And you can see the hospitalsthat have been fined and which
ones are under review.
And so...
compliance folks can readthose.
(23:59):
So you get kind of get a senseof what they're looking at.
Is that something you'drecommend compliance teams do?
Absolutely.
And you could even
Dave Cardelle (24:05):
click into the
PDF of the actual letter because
they're all a little bitdifferent.
Some hospitals are getting pingdinged on different things.
I actually go into the PDFs andI like reading those because
you can see to your point, it'sa nice blueprint of what could
be happening out there.
Things are changing and they'regonna ratchet up scrutiny.
So they're gonna be looking ata little bit more than what they
(24:26):
had been.
And again, it was prettynominal.
So compared to 75%, there's acouple of sources that say
roughly 75% in our own source,of hospitals could be deemed
non-compliant for some prettyspecific, basic things, mostly
around that average negotiatedprice.
Wow.
That's amazing.
CJ Wolf (24:45):
Yeah.
And with the, with the kind ofthe strategy vision and, and,
and I don't know if rhetoric'sthe right word that comes from
the administration, they want togo after that.
And, and that's what it seemslike to me.
Dave Cardelle (25:00):
Yeah, with $12
billion at stake, a lot of folks
look at that differently,right?
Is it motivation for them todouble down because it's a
revenue center?
Or is it because they believe,and maybe it's both, that true
price transparency can only behad and all the benefits of it,
which are more than justshopping for pricing, but all
(25:22):
the benefits of pricetransparency to kind of get to
an equilibrium of what realpricing should be in a
competitive market, all of thosegood things can only be had
only happen when everybody'scompliant.
So, you know, there's probablya couple of drivers there, but
either way, you know, I fall onthe side of default for
hospitals to say, Hey, you know,spend a quarter of a million, a
(25:42):
half a million dollars,whatever it takes to get your
team in place and to geteverything kind of really as a,
as a, you know, a solid processthat you could feel comfortable
about, not only to save 2million, but all the other
things that go with it toimprove your pricing.
CJ Wolf (25:57):
Yeah, such good
information.
Dave, we're getting kind oftowards the end, but I want to
see if I haven't asked youanything that you think is
really important for ourlisteners to hear from you.
Dave Cardelle (26:09):
Yeah, thanks, CJ.
Yeah, a couple things.
You know, there's other nuanceddetails around the ease of
posting the files on the MRF tomake it more accessible to
patients so they don't have togo through a CAPTCHA or through
some kind of a login and allthis registration and stuff.
They're trying to put inrequirements to make it super
easy for folks that are shoppingto do that.
(26:31):
And so I would recommenddefinitely read the, you know,
the detail of the requirements.
I think, you know, any teaminside of a hospital should
really know that well so thatthey're compliant that way too.
The other thing I would say isthat I'm working right now with
the committee, the PriceTransparency Committee, and
there's an open commentsopportunity for the prescription
(26:55):
drug price transparency rule orpricing that's going into
effect.
So they're trying to fix, CMSrecognizes that the lack of
standardization andinteroperability from the
original price transparencyrule.
They're trying to address thatin the prescription one that's
coming up.
So July 21st is the cutoff.
(27:17):
So I would say anybodyinterested in this, make sure
you get your comments andconcerns to CMS.
They're looking for input fromthe industry.
I've created that for myselfand for our organization, but
there's an opportunity to fixsome of this stuff and address
concerns that hospitals may havearound this.
But they are trying to get itmore specific.
(27:39):
They're saying it's got to bebe a CSV or a JSON file.
They're giving specific, youknow, detailed information to
try to mitigate some of thethings that have happened from
the original.
Wow.
The last thing is the next onthe list is going to be imaging
and diagnostic and labs.
So it's going to keep going.
(28:00):
So just expect it to eventuallyget to physicians and fee
schedule.
You know, they're just going tobe asking for just about
everything that can be billedout there.
CJ Wolf (28:08):
Yeah, that's really
valuable to hear you say.
You've been around a while.
You can read the tea leaves,and you can see this wave of
transparency that's going on.
I worked in the medical deviceindustry for a while, and there
was this sunshine law whereanything that pharma or med
(28:29):
device gave to hospitals orphysicians had to be reported.
And that's out on a website.
And so I think you're right.
Kind of this wave oftransparency is going to affect
it all.
Absolutely.
Yeah.
Well, Dave, this has beenwonderful.
Thank you so much for sharingthis information today.
Oh,
Dave Cardelle (28:47):
my pleasure.
CJ Wolf (28:48):
It's always great
Dave Cardelle (28:49):
to connect with
your audience and any feedback
of other topics related from thehealth plan or payment
integrity side that I can share.
I'd love to do that.
CJ Wolf (28:59):
Great.
And we'll put in the show notesanything that you send us if
you want to include a link ofhow to get a hold of you or your
team.
And so if people need to askfurther questions or interested
in your services, they can reachout to you that way.
Absolutely.
Thank you.
Appreciate it.
Okay.
Well, and thank you to all ourlisteners for listening to
another episode.
As always, we ask you if youhave topics or speakers that
(29:22):
you'd like to hear on the show,please reach out to us.
Until next time, everyone, takecare.