Trump administration plans to require hospitals to list 'shoppable' prices

White House
In an announcement from White House officials Monday morning, Department of Health and Human Services Secretary Alex Azar said an executive order to create rules that require hospitals to provide prices to patients before they receive care would "put American patients in control and address the fundamental drivers of high American health care costs." (Pixabay)

Hospitals could be required to provide prices in an "easy-to-read, patient-friendly format" before they provide services to patients under rules that will be proposed in an executive order signed by President Donald Trump. 

In an announcement held by White House officials Monday morning, Department of Health and Human Services (HHS) Secretary Alex Azar said the order would "put American patients in control and address the fundamental drivers of high American healthcare costs." 

"Patient empowerment, of course, requires transparency around price and quality," Azar said.

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RELATED: As hospitals post price lists, consumers are asked to check up on them

The executive order included several major components, Azar said. Among them: 

  • It directs HHS to issue a rule requiring hospitals to disclose "in an easy-to-read, patient-friendly format" prices that reflect what patients and insurers actually pay.
  • The order requires HHS to put forth a proposal to require providers and insurers to provide patients with information about out-of-pocket costs before they receive healthcare services.
  • It calls for the administration to lay out a road map for consolidating quality measures across all federal healthcare programs.
  • It calls for the administration to expand access to de-identified healthcare claims data to provide data sets for supporting researchers in identifying opportunities for improving American healthcare.
  • It directs the Department of the Treasury to expand consumers' ability to take advantage of health savings accounts (HSAs) and other medical accounts by expanding the range of services for which HSA dollars can be used. It also requires HHS to work with other departments to determine how to better address surprise billing and other barriers to transparency and "shoppability in healthcare." 

Officials did not give a timeline for the plan, which is almost certain to draw ire across the hospital industry over concerns of competition as well as complexity. Administration officials acknowledged those concerns and said they would be putting out regulations focused on requiring hospitals to disclose "information based on negotiated rates" and to make it publicly available.

RELATED: CMS looking to define enforcement for its hospital price transparency rule 

However, they said the level of detail that would be required to comply will be made available as part of the proposed rule-making process. The administration will also include industry input, the officials said.

That said, they indicated the requirement would need to result in prices for common or "shoppable" items and services to be available in an "easy-to-understand" customer-friendly format.

"Every time any one of us goes to a doctor or a hospital, within a couple of weeks in our mailbox arrives an explanation of benefits. That explanation of benefits contains the list price for the procedure you got, what the negotiated rate between the insurance plan and the provider and what your out-of-pocket is," a senior administration official said. "The rates are there. This is not some great state secret out there. What we're saying is, you've got the right to know the information before you get the service." 

Industry response

The American Hospital Association (AHA) and the Federation of American Hospitals (FAH) both said they supported the aims of the administration around transparency in the absence of further details.

Hospitals already help patients navigate their health benefits through the use of in-person counselors and, increasingly, through web-based tools, the AHA said in a statement. They also said consumers making healthcare decisions not only based on price, but also on quality, recommendations from their doctors and available time of specialized services.

"While details are being developed, it’s important to note 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," AHA President and CEO Rick Pollack said in a statement.

The FAH agreed. 

"We appreciate the administration’s executive order where it will meet consumer transparency needs," FAH President and CEO Chip Kahn said in a statement. "If implementing regulations take the wrong course, however, it may undercut the way insurers pay for hospital services resulting in higher spending. The Federal Trade Commission has said that spending would likely increase if hospital-insurer payment arrangements were published."

Leading insurance industry group America's Health Insurance Plans (AHIP) also raised concerns about the impact transparency would have on prices.

“We also agree that patients should have accurate, real-time information about costs so they can make the best, most informed decisions about their care," said Matt Eyles, president and CEO of AHIP in a statement. "But publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients, and taxpayers."

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