To Lower Costs, Trump to Force Hospitals to Reveal Price of Care
A proposed federal rule would make hospitals list the prices they negotiate with insurers, allowing consumers to seek better deals for care.
The Trump administration on Friday announced it would begin forcing hospitals to publicly disclose the discounted prices they negotiate with insurance companies, a potentially bold move to help people shop for better deals on a range of medical services, from hip replacements to brain scans.
“For decades, hospitals, insurance companies, lobbyists and special interests have hidden prices from consumers, so they could drive up costs for you, and you had no idea what was happening,” President Trump said Friday afternoon in the White House’s Roosevelt Room. “You’d get bills that were unbelievable and you’d have no idea why.”
Patients, he said, have “been ripped off for years.”
The federal rule, which would not take effect until 2021, is part of a broader push by Trump officials to make health care markets more transparent to patients. The administration also unveiled a proposed rule to require insurers to allow patients to get advanced estimates of their out-of-pocket costs before they see a doctor or go to the hospital.
Mr. Trump rolled out the initiative personally, providing some counterprogramming to the second day of impeachment hearings while showing his willingness to take on powerful interest groups like hospitals and insurers.
Mr. Trump was “taking historic action to make health care prices transparent for consumers, yet the coverage on all the cables remains on the impeachment inquiry charade,” his press secretary, Stephanie Grisham, tweeted. “Dems should get back to work — just like our” president.
The hospital industry, which has long kept its negotiations with insurers secret, said it would challenge the rule in federal court. “This is a very radical proposal,” said Tom Nickels, an executive vice president with the American Hospital Association, a trade group.
Hospitals say the administration does not have the authority to compel them to disclose their private negotiations and compared the order to forcing private parties to reveal trade secrets.
But if the rule survives, “it’s a game changer,” said John Barkett, a former Obama administration official who is now a health policy expert at Willis Towers Watson. Knowing the price of a colonoscopy or knee surgery before it takes place “would be hugely helpful,” he said.
The administration’s decision to aggressively tackle the secrecy surrounding hospital prices came amid widespread concern about rising costs for medical care. Democrats have also been campaigning on soaring health care costs, and both parties fear entering the 2020 campaign season with unfulfilled promises to gain control of out-of-pocket health spending.
People “are increasingly exposed to the crazy pricing of health care,” said Chas Roades, one of the founders of Gist Healthcare, a consulting firm in Washington. “We are overdue for a public airing of how all of this works.”
While the hospitals’ legal challenge may succeed, they are vulnerable to the increasing public outcry over high prices, Mr. Roades said. “It’s not a good look for the industry to push back on transparency on prices.”
Mr. Trump seemed to relish taking on powerful interest groups. “I don’t know if the hospitals are going to like me too much anymore with this, but that’s O.K., right?” he asked. About health insurers, he quipped, “they’ll be thrilled.”
The new rule requires hospitals to make a range of prices easily available, such as prices negotiated within an insurer’s network, what hospitals are paid if their care is out of a patient’s insurance network, and what the hospital would accept for the treatment if paid in cash.
Administration officials, employers and others have criticized hospitals and insurers for keeping the deals they strike a secret, making it challenging for patients to seek less expensive care. They argue that by making it easier for people to find the actual prices that insurers pay — and not just the standard list prices for various services, which the Trump administration started requiring hospitals to post earlier this year — hospitals will be under more pressure to compete on prices.
The rule has the potential to roil the health care industry, which critics argue use the secrecy of their negotiations to keep prices high. A recent study showed that private insurers pay some hospitals two to three times more than the federal Medicare program pays for the same care. Even employers say they have little visibility into the prices being paid by the insurers on behalf of their workers.
Proponents of the rule say it will create a working health care market in which hospitals compete on price and quality. People will be able to look for hospitals that give them the best value, said Cynthia Fisher, a health care entrepreneur and the founder of the group Patient Rights Advocate. “It will be aggregated and assimilated in a way that people can have ready access to it,” she said.
Both the hospitals and health insurers say they should not be required to make public what they consider proprietary information, and they are expected to mount legal challenges to any mandated disclosure. In Ohio, a state law requiring price transparency that was passed two years ago is still waylaid in the courts.
Hospitals say that disclosing prices would lead to higher costs, not reduce them, because each institution would know the prices of its competitors and could be reluctant to settle for less.
Health insurers, which have voiced similar concerns, said they were evaluating the rules.
“Transparency should be achieved in a way that encourages, not undermines, competitive negotiations to lower patients’ and consumers’ costs and premiums,” said Matt Eyles, the chief executive of America’s Health Insurance Plans, which represents insurers, in a statement.
Alex M. Azar II, the health and human services secretary, called that “a canard.”
But the legal challenge ahead is real. When the Trump administration tried to require pharmaceutical companies to disclose the list price of their drugs in their television ads, the courts blocked the regulation. A federal judge ruled last summer that the Department of Health and Human Services exceeded its regulatory authority with the rule, which was seen as largely symbolic since list prices are not what patients typically pay.
“We may face litigation, and we feel we are on a very firm legal footing,” said Mr. Azar, who emphasized the information is already being made public to patients on what is called an explanation of benefits form — but after they go to the doctor or get a medical treatment.
Mr. Nickels from the hospital association said information about all of a hospital’s negotiated prices with individual insurers is not currently available. “That isn’t public information given to everyone, given to competitors,” he said.