Congress

Trump order to make medical service costs more transparent

The order will require hospitals and insurers to provide more information on costs of medical services before patients receive them

U.S. President Donald Trump signs an executive order during an East Room event at the White House on March 21, 2019. Trump signed an executive order Monday that would put rules in place requiring hospitals and insurers to provide more information about the costs of medical services before a patient receives them. (Photo by Alex Wong/Getty Images)

President Donald Trump on Monday will issue an executive order directing his administration to put rules in place requiring hospitals and insurers to provide more information about the costs of medical services before a patient receives them.

The order will kick off a process at the Health and Human Services Department to develop rules for the transparency requirements. The new rules will be meant to require hospitals to publicly post charges for common items and services in a consumer-friendly manner, and to require insurers to inform patients about the amounts they must pay before services are actually provided.

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More specific details will be developed during the rulemaking process, senior administration officials said Monday. The Centers for Medicare and Medicaid Services will write the rules, an official said, and the new rules may be included in this year's annual hospital payment rules.

HHS Secretary Alex Azar said the intent of the order is to put Americans more in control of their health care choices and improve competition in order to drive down prices.

“American patients are being taken advantage of by a system that keeps critical information from them,” he said on a call with reporters.

The Treasury Department will also look at expanding the range of services that are allowed to be paid for with tax-exempt health savings accounts, Azar said. The order will also require the administration to lay out a roadmap for simplifying federal quality measures for health care programs, and expand access to anonymous medical billing data for research purposes.

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Hospitals and insurers are both concerned that these kinds of transparency requirements could undercut their ability to negotiate rates.

“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,” Matt Eyles, president of America’s Health Insurance Plans, said in a statement before the order was issued.

Hospitals, which accept specific insurance plans in exchange for negotiated rates for services, have the same concerns, though in reverse. If the insurers know the lowest rate hospitals are willing to accept for services, the hospitals would have a weaker negotiating position. The American Hospital Association outlined their concerns in comments on a separate proposal related to health information technology.

Both groups say their positions are backed up by the Federal Trade Commission. In a 2015 post on the FTC website, the commission’s Office of Policy Planning wrote: “Some types of information are not particularly useful to consumers, but are of great interest to competitors. We are especially concerned when information disclosures allow competitors to figure out what their rivals are charging, which dampens each competitor’s incentive to offer a low price, or increases the likelihood that they can coordinate on higher prices.”

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The FTC encouraged policymakers to consider focusing on transparency in costs that are the most meaningful to consumers, such as their predicted copayments and other out-of-pocket costs. AHIP says that many insurance plans offer tools to help estimate costs associated with deductibles and copays, and consumers can call customer service centers to ask about their coverage.

A senior administration official called the concerns by hospitals and insurers overblown. The negotiated rates are sent to customers after the services are rendered, the official said, so the information is already out there. If the administration’s rules are finalized, patients would simply have the information in advance.

“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 contains the list price, the negotiated rate between plan and provider, and what our out of pocket is,” the official said. “This is not some state secret.”

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