April 26, 2016
Price transparency refers to the extent to which information is obtainable. It is when all parties in trading are aware of the product pricing i.e. awareness and knowledge of the bid price and ask price at various price levels, along with the quantities of any good or service involved. This also results in discrepancy in the billing and coding, thus affecting revenue cycle management.
DME refers to equipment such as oxygen supplies, wheel chairs, knee braces etc. It has to be prescribed by a medical practitioner and the person buys these equipments from a DME provider or sometimes, the doctor himself calls a DME company for delivering it straight to the patient's home. This is where the price transparency has a catch. A knee brace could cost anywhere from a range of $250 to $1500 from two different DME companies. DME billing then gets erroneous due to double bills and unsuitable expenses.
Effects of Price Transparency-
DME billing takes a course on patients also as sometimes insurances have a set limit on what they can pay for the DME equipment. If the cost goes beyond that limit, the patient ends up paying himself. Overpayments occurring in DME billing are mainly due to price transparency being available on the web and various catalog prices. Again, due to changes in methods of production, market variations and product innovations, Medicare ends up paying much more overall for DMEPOS (paying the market price for dressings-surgical but overpaying for wheelchairs). Especially in expensive and specialized medical devices, there are very few competitors; devices such as implantable cardioverter defibrillators (ICDs), pacemakers etc. fall under label of "differentiated oligopoly" category. Manufacturers do not set a single price for such products and charge different prices from different buyers (sellers have control on the prices they sell at).
Variation in Pricing-
Sometimes, contracts (after sales agreements) forbid buyers to disclose the charges to other buyers. Hence, buyers do not know what price the other buyers have paid for the same/similar product. The "Law of One-Price" does not hold. With hospitals too, prices vary depending on the bargaining power. Sellers also tend to earn a profit if items are patented. Due to physician and staff preferences too, the prices are different as the decisions on which product to use is dependent on them, buyers end up paying different prices on the same product as the buyers are larger in number.
There have been efforts to control the aspects regarding pricing policy and disclosure as it can improve the dialogue and create an ability to select alternative products. If the physicians across hospitals negotiate with device manufacturers to reduce and control the price variations, it can be beneficial to patients, hospitals and insurance payers. Hence, a disclosure might modify the purchasing power and loyalty of the physician/patient and initiate controlling hospital costs. US healthcare system works on market principles, and the government can regulate, finance and produce enough for an equitable and proficient deliverance of health care services.
Best Billing and Coding Practices