The Trump administration took a step toward making paying for health care more like paying for coffee, computers or clothing, by letting patients know prices up front — but what consumers could do with that information once they have it is unclear.
President Donald Trump signed an executive order Monday that could require hospitals to disclose rates they privately negotiate with health plans for tests, surgeries and other procedures. Hospital care cost Americans about $1.1 trillion in 2017, accounting for one-third of all U.S. medical spending.
The administration also wants to make medical providers and insurers provide patients with estimates of their out-of-pocket costs before they receive care, a step to cut down on consumers being presented with surprise bills long after they’ve been sent home from the hospital.
Trump’s order, if it survives the federal rulemaking process and likely legal challenges, could reshape the way much of the industry does business. Employers and patients have complained that a lack of transparency helps keep costs high and makes it harder to shop around. The changes sought by the president could drag prices long obscured by layers of contracts into the sunlight.
However, industry groups warned that the plan could backfire and cause prices to climb. And some experts said that consumers aren’t armed with enough information or don’t have the right incentives to make financially sound decisions about their own care.
Health and Human Services Secretary Alex Azar touted the president’s directive as a way to “put American patients in control and address the fundamental drivers of high American health care costs in a way that no president has ever done before.”
The text of the order leaves a lot of ambiguity about what prices will actually be published. It instructs Azar’s agency “to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates” in a way that patients can digest. The regulations to do so should be proposed within 60 days.
Making negotiated rates public could pressure pricier hospitals to justify charging more than lower-priced competitors, said Chas Roades, co-founder and chief executive officer of consultancy Gist Healthcare Inc. It might also show employers that they aren’t getting as good a deal as they thought from insurers hired to negotiate on their behalf, he said.
“There’s been sort of a big shell game going on inside the industry,” Roades said. “I think all of the industry players are rightly concerned that when the actual purchasers of health care see what’s going on, they’re going to demand some real change.”
Industry groups broadly oppose a government mandate to make prices more visible.
“Publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients, and taxpayers,” Matt Eyles, president and chief executive officer of America’s Health Insurance Plans, said in an emailed statement.
Eyles said insurers support giving patients accurate information about their costs, but publishing negotiated rates would create “a floor — not a ceiling — for the prices that hospitals would be willing to accept.”