“Our goal was to give patients the knowledge they need about the real price of health care services.”
The Trump administration on Friday announced sweeping new rules aimed at making it easier for consumers to learn how much hospitals charge health insurers — part of a broader transparency push that’s prompted industry giants to promise legal challenges.
One proposed rule targets health plans in both the Obamacare exchanges and employer-sponsored insurance market, the latter of which covers 155 million Americans and is where costs have been growing the most. Plans would have to disclose the rates they have negotiated with providers in their networks, as well as the amounts they will allow for out-of-network care.
Insurers would also have to tell patients in real-time, through an online tool, what they’ll owe out-of-pocket for all covered health care services. The requirement could make it easier for people to compare the costs for specific doctors or hospitals before they receive care.
Under a separate policy the administration finalized Friday, hospitals would have to disclose currently confidential rates they’ve negotiated with insurers and other cost information, like what hospitals are willing to accept in cash from a patient. The measure was first proposed in July and is scheduled to take effect in January 2021.
Pricing transparency has emerged as an increasingly prominent part of President Donald Trump’s health care agenda, as he tries to chip away at Democrats’ polling advantage on the issue ahead of the 2020 election. The new rules will help patients shop for a better deal, Trump said during a White House event promoting the effort Friday afternoon.
“Our goal was to give patients the knowledge they need about the real price of health care services. They’ll be able to check them, compare them, go to different locations,” he said.
Health and Human Services Secretary Alex Azar said the new measures “may be a more significant change to American health care markets than any other single thing we’ve done.”
But just hours after the announcement, four major hospitals groups said they would file a lawsuit to block the rules. The groups, including the American Hospital Association, will argue they have the legal right to negotiate with insurers “without unwarranted government intrusion.”
A separate bid to force drugmakers to list their prices in television ads was halted in July by a federal judge, who said the health department didn’t have the authority to issue that rule. Azar said he believed the new transparency rules were on “very sound legal footing.”
“I would hate to see hospitals take a page out of Big Pharma’s playbook and oppose transparent pricing information for America’s patients,” Azar said.
CMS Administrator Seema Verma said the health information insurers must disclose is already available to patients in their explanation of benefits statements, but patients would now be able to access that information sooner.
“We’re just requiring that it’s available before care, and not after,” Verma said.
Hospitals will have to post that information online for 300 common services such as X-rays and lab tests in an easily understandable format. CMS will specify 70 of these services, and hospitals can choose the rest. Hospitals that don’t comply could face fines of up to $300 per day.
Trump in June directed his Cabinet secretaries through an executive order to draft the new regulations, triggering widespread ire in the health industry.
After the proposed hospital rule was released in July, the American Hospital Association quickly signaled it would weigh litigation if the plan was finalized. Major industry groups contend that revealing negotiated rates could make it harder to negotiate lower fees and wind up raising prices, or tilt regional markets toward dominant players.
But as health care costs continue to climb and employers shoulder more and more of the burden, employer groups and policy experts view these changes as potentially the only alternative to widespread government price-setting.
“There’s no other hope,” said Robert Berenson, a health policy expert from the Urban Institute. “If this doesn’t work, you’ve got to go to price regulation. These prices are just crazy.”