Trump order to force hospitals to reveal information behind negotiated rates

June 24, 2019

Dive Brief:

Hospitals will be required to make public information based on their negotiated rates with insurers and both providers and payers will be ordered to give patients estimates for out-of-pockets costs for procedures in advance under an executive order President Donald Trump is expected to sign Monday.

The order will direct HHS to begin the rulemaking process for those requirements and to lay out a roadmap for consolidating quality measures across all federal healthcare programs. It will also expand access to deidentified health claims data and allow health savings accounts to be used for additional medical services.

The move will almost certainly be met with backlash from a wide swath of the healthcare industry. Payer and provider groups oppose being forced to give more information about their negotiations. Analysts noted the order is likely to face a legal challenge, which could at least delay implementation.

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The order is a major step toward giving patients more information about their healthcare services and what bills they can expect to receive. On a call with reporters Monday, HHS Secretary Alex Azar said people need to know more so they can be wise consumers of healthcare.

“It can’t come a moment too soon because every day patients are being taken advantage of by a system that keeps critical information away from them,” he said.

Exactly how aggressive the requirements will be, however, is yet to be determined. The executive order directs HHS and the Departments of Labor and Treasury to start making the rules to achieve its directives. Details will be worked out in the rulemaking process.

“The executive order leaves room for us to work … with those in industry to discern the level of detail that is available and usable and consumer-friendly for patients in a format that they can take advantage of,” a senior administration official said.

Analysts at SVB Leerink said in a note early Monday the order would likely have less impact on large hospital chains like HCA and Tenet.

“In our view, the pricing transparency is likely to result in contract rates converging to the mean while the largest hospitals with local market power will see less impact,” they wrote.

The analysts also predicted the action would be neutral to positive for payers like UnitedHealth Group, Cigna and CVS-Aetna while being neutral to negative for Blue Cross Blue Shield plans, including Anthem. 

Jefferies analyst Brian Tanquilut told Healthcare Dive last week price transparency is more of a provider issue. “It could actually be a positive for payers as transparency could force expensive hospitals to adjust pricing down,” he said.

This isn’t the Trump administration’s first foray into seeking more price transparency in healthcare. CMS now requires hospitals to post their standard charges online in a machine-readable format, though the agency has acknowledged it has no real way to enforce the requirement and hospitals have been spotty in compliance.

Lawmakers have also taken up the issue. Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee, introduced a bill last month that would require health insurers to tell their beneficiaries what out-of-pocket costs they would face for any in-network procedure or prescription drug they seek.

The American Hospital Association has criticized such proposals. When a proposed rule from the Office of the National Coordinator for Health IT briefly floated the idea of making negotiated rates public, AHA said the proposal “misses the mark” and argued for insurers to do more.

For their part, insurers have also pushed back on more disclosure.

“If every contract and every negotiated rate were public, no doctor or hospital would want to be paid the lowest rate — they would all be motivated to demand higher payments. And health care costs would rise for all Americans as a result,” America’s Health Insurance Plans CEO Matt Eyles said in a statement on earlier proposals.

Source: Heathcare Dive