What the Healthcare Price Transparency Order Means for Payers

President Trump’s regulation requires healthcare price transparency on treatment costs and price negotiations, the White House announced in a press release on Monday

“To make fully informed decisions about their healthcare, patients must know the price and quality of a good or service in advance. With the predominant role that third-party payers and Government programs play in the American healthcare system, however, patients often lack both access to useful price and quality information and the incentives to find low-cost, high-quality care,” President Trump stated in the executive order.

Payers, providers, and self-insured group health plans would be required to either furnish the patient with out-of-pocket cost information or make the costs associated with their procedure available. The patient must be able to know the estimated cost before receiving treatment.

Before September 22, the Secretaries of Health and Human Services (HHS), the Treasury, and Labor must give advance notice of the proposed rule and solicit comments.

The order also specifically demands greater cost information from hospitals, stating that, within 60 days of the order, the HHS Secretary will propose a rule requiring hospitals to publicize their negotiated charges including costs for services, supplies, and fees.

Furthermore, the order charges the HHS Secretary to issue an advance notice of proposed rulemaking within 90 days that will include a proposal to require providers, insurance issuers, and self-insured group health plans to provide or facilitate access to out-of-pocket cost information before a patient receives care.

Alex Azar, the HHS Secretary, supported the order in a brief press release. 

“For decades, America’s healthcare system has kept price and quality information secret from the patients who need it. Healthcare experts all across the political spectrum have long agreed this has to change,” said Azar.

In addition to providing patients with more information, the executive order seeks to initiate a new plan for healthcare quality measurements and data reporting techniques.

The Health Quality Roadmap (Roadmap) will explain how to determine, embrace, and publicize quality measurements, align measurements for inpatient and outpatient, and eradicate any measures that do not produce high-value results or that counteract the system. These measures will apply across Medicare, Medicaid, the Children’s Health Insurance Program, the Health Insurance Marketplace, the Military Health System, and the Veterans Affairs Health System.

The order also mandates a plan by which group health plans and taxpayer-funded healthcare programs will grant researchers, innovators, providers, and entrepreneurs access to de-identified claims data, within the realm of privacy and security regulations. The data would be used to create tools for patients to make cost-effective healthcare decisions. It would also serve to help researchers isolate inefficiencies and identify improvement opportunities in the healthcare system.

Finally, the order supports giving chronically-ill patients the opportunity to choose high-deductible health plans in conjunction with a health savings account to pay for low-cost preventative care solutions in advance of the deductible.

American Health Insurance Plans (AHIP) and the American Hospital Association (AHA) replied to the order with support for the underlying healthcare price transparency mission but both groups expressed reservations about the proposed agenda.

“Competition experts, including the bipartisan Federal Trade Commission, agree that disclosing privately negotiated rates will reduce incentives to offer lower rates, creating a floor – not a ceiling – for the prices that hospitals would be willing to accept,” Matt Eyles, president and CEO of AHIP, said in a statement.

If payers and providers must disclose prices on every hospital product, service, and procedure, he argues, the rule will impede the transition to value-based care.

Eyles noted that cost calculators and regular reports on deductibles and out-of-pocket limits are already available to patients. Healthcare professionals can work together to increase consumers’ knowledge of these tools and their implications, he suggests.

Rick Pollack, president and CEO of AHA, stated that “hospitals already provide consumers with information on pricing, but publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”

The deadlines for these proposals range between September and December of this year when they will become available for comment.