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White House seeks disclosure of actual healthcare prices

President Trump
President Trump speaks about healthcare prices at the White House on Friday. The healthcare industry is already saying it will sue over his price disclosure rule.
(Evan Vucci / Associated Press)

New rules the Trump administration issued Friday would require insurers and hospitals to disclose upfront the actual prices for common tests and procedures to promote competition and push down costs.

The sweeping changes face stiff pushback from the healthcare industry. A coalition of major hospital groups quickly announced that hospitals will sue to block key provisions, which regardless don’t take effect immediately.

Even in an ideal world where information flows freely, patients and their families would have to deal with a learning curve to get comfortable with the byzantine world of healthcare billing. What sounds like the same procedure can have different billing codes depending on factors that may not be apparent to an untrained person.

Speaking at a White House event, President Trump skipped over potential difficulties, at times making it sound like openness in healthcare pricing was a done deal.

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“After many years, we will have transparency,” Trump said. “Within about 12 months I think it will be fully implemented.” He predicted “a tremendous impact on prices.”

A final rule issued Friday would apply to hospitals, and a proposed regulation would apply to insurance plans. Disclosure requirements for hospitals would not take effect until 2021; for insurers, the timing is unclear. The requirements do not directly affect doctors.

Officials say the rules would shine a spotlight on the confusing maze of healthcare prices, enabling informed patients to find services at the lowest cost. Prices for an MRI scan, for example, can vary by hundreds of dollars depending on where it’s done.

“American patients have been at the mercy of a shadowy system with little access to the information they need to make decisions about their own care,” Health and Human Services Secretary Alex Azar said, pointing out that many hospital procedures are scheduled in advance, and that gives patients a chance to shop around.

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Under the administration rules, insurers would have to provide patients with online access to individualized estimates, in advance, for what they would owe out-of-pocket for covered services. Most people now see such information after the fact, when their “explanation of benefits” form arrives in the mail.

Insurers and hospitals say the push for disclosure goes too far. They say the government would force them to publicly disclose rates they negotiate as part of private contracts that normally are beyond the purview of authorities.

“This rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations,” the American Hospital Assn. and three other major hospital groups said in a statement. “Our four organizations will soon join with member hospitals to file a legal challenge to the rule on grounds including that it exceeds the administration’s authority.”

Insurers also contend the plan could backfire, prompting relatively low-cost providers to try to raise their prices when they see that others are getting more.

Azar dismissed such criticism. “Point me to one sector of the American economy where having price information in a competitive marketplace actually leads to higher prices,” he said.

With the hospital industry going to court, it could be a long time before consumers see changes.

For hospitals, the rule would require publication in a consumer-friendly manner of negotiated rates for the 300 most common services that can be scheduled in advance, such as a knee replacement, a Cesarean-section delivery or an MRI scan. Hospitals would have to disclose what they’d be willing to accept if the patient pays cash. The information would be updated every year.

It also would require hospitals to publish all their charges in a format that can be read on the internet by other computer systems. This would enable web developers and consumer groups to come up with tools that patients and their families can use.

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For insurers, the rule would require creating an online tool that policyholders can use to get a real-time personalized estimate of their out-of-pocket costs for all covered healthcare services and items, including hospitalization, doctor visits, lab tests and medicines.

It also would require insurers to disclose online the rates they negotiate for in-network providers, as well as the maximum amounts they would pay to an out-of-network doctor or hospital.

The disclosure requirements would carry out an executive order Trump signed this summer.


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