In a recent AHCP blog post, we explained that a hospital price transparency law that went into effect January 1 of this year really does very little to help consumers better understand the cost of medical care. Instead, it simply requires hospitals to post their chargemaster data in a machine-readable format on its website. We finished the post by saying that “only time will tell how impactful this particular rule will be, but the movement towards transparency is a step in the right direction.”
Well, we’re happy to report that the government might be taking another—and this time much bigger—step. On May 29, Amy Goldstein and Josh Dawsey with the Washington Post wrote about an executive order President Trump is preparing to issue in an effort “to foster greater price transparency across a broad swath of the health-care industry.” This comes “as consumer concerns about medical costs emerge as a major issue in the lead-up to next year’s presidential election.”
According to the article, the order would, among other things, “require insurers and hospitals to disclose for the first time the discounted rates they negotiate for services.” As a reminder, one of the criticisms of the hospital transparency rule we recently reported on is that it only requires hospitals to disclose their chargemaster rates, the amount they charge before applying the discounts they’ve agreed to with the various health plans. The reason that information isn’t very helpful is because it’s not the amount people with insurance actually pay.
As one might imagine, this upcoming executive order is being met with no small amount of resistance from the insurance industry, which considers their contracted rates to be proprietary. In fact, the idea of compelling “the disclosure of negotiated rates” is so controversial and, according to the authors’ sources, “has stirred such intense industry opposition…that it may be dropped from the final version.”
The order is expected to be released in mid-June and, as with most executive orders, any required change would not take effect right away. Instead, the order would ask Health and Human Services and other government agencies to re-write the rules to incorporate the changes recommended by the administration. And, as always, the rulemaking process does allow the public to make comments and offer suggestions, so, to say the least, it will take time.
Still, the fact that the administration is focusing on price transparency is another important and encouraging step and appears to be a win for advocates of consumerism in health care. But, as already mentioned, not everyone is on board with the idea. As Kristine Grow with America’s Health Insurance Plans puts it, “This is bad transparency, because it is highly likely to cause prices to go up for everyone.” AHIP has already shared its concerns with the administration and will no doubt be submitting official comments when the proposed rule is issued, probably later this year.
For now, we’ll keep an eye on the upcoming executive order as well as any bills in congress aimed at increasing transparency in health care. If anything starts to gain some momentum, we’ll be sure to let you know.