Trump Administration Targets ‘Secretive Nature’ of Health Care Pricing

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Source: New York Times

Attacking “the secretive nature of pricing in the health care market,” the Trump administration said this week that it wanted to require public disclosure of the rates that doctors and hospitals negotiate with health insurance companies.

“Patients have a right to price information” before they receive care, the administration said.

Disclosure of the wildly different prices paid by insurers for the same services in the same market would probably incite competition and “drive down health care prices,” the administration said in soliciting comment on its idea.

The concept, set forth Monday in the Federal Register and reported by The Wall Street Journal, is not a formal proposal, but rather a first step toward a possible proposal, clearly signaling the direction in which President Trump wants to go.

Price transparency has been a hallmark of health policy under Mr. Trump. In a country that spends more than $3.5 trillion a year on health care, administration officials say, it is absurd that consumers cannot shop for medical goods and services as they shop for airline tickets and electronic gear.

“There is no more powerful force than an informed consumer,” Alex M. Azar II, the secretary of health and human services, has often said, exhorting health care providers and insurers to “become more transparent about their pricing.”

It was not immediately clear whether the price disclosures contemplated by the White House would directly benefit consumers shopping for a knee replacement operation or the delivery of a baby at a hospital.

“Price transparency is desirable,” Robert Weissman, the president of Public Citizen, a consumer group, said on Friday. But, he said, the disclosure requirement described by the Trump administration “won’t make any difference in the experience of individual patients or for the health care system over all.”

What consumers want to know is what they will have to pay, and that is not the same as the reimbursement rates negotiated by doctors, hospitals and insurers, Mr. Weissman said.

In a similar vein, the administration has proposed requiring pharmaceutical companies to disclose the list prices of prescription drugs they advertise on television, even though consumers often pay less. And the administration has required hospitals to post the list prices for all of their services. Consumers say the data, posted online in spreadsheets for thousands of procedures, is often incomprehensible — a hodgepodge of numbers and technical medical terms.

In its latest proposal, the administration asked if health care providers could be required to disclose the “negotiated rates” for all of the insurance plans with which they do business.

Thomas P. Nickels, an executive vice president of the American Hospital Association, said this was “a radical idea, requiring the disclosure of privately negotiated rates between two parties in a contract.”

Moreover, Mr. Nickels said, it would be impractical because a hospital may have contracts with a dozen insurers, and each insurer may have four or five different health plans with different terms.

The new initiative to require disclosure of price information came in an unusual way, slipped into the preamble to a proposed rule promoting the exchange of information stored in electronic health records. In 2009, Congress provided money to foster the adoption of electronic records, but health care providers cannot always communicate with one another when they use technology made by different vendors.

Economists say health care markets are opaque and frustrate consumers who want to shop for the best value.

Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University in Pittsburgh, said it was possible shining sunlight on the rates paid to doctors and hospitals could put pressure on the industry to lower prices. But in some places, hospitals have market power and can raise prices without losing customers to competitors.

“If you are the only hospital in town, any insurer will have to have you in its network,” Mr. Gaynor said. “The fact that prices are public will not change that.”

The Trump administration said that its plan could reduce huge, inexplicable differences in prices.

In Minnesota, it said, insurers pay as much as $47,000 and as little as $6,200 for a total knee replacement operation. For a total hip replacement, payments have ranged from $6,700 to $44,000.

Reimbursement for a typical vaginal delivery of a baby ranged from $2,900 to $12,300 in one study of Minnesota markets, while C-section deliveries ranged from $4,700 to $22,800.

The American Medical Association and America’s Health Insurance Plans, a lobby for insurers, said they needed more information about the administration’s plan before they could formulate a response.

A research report by securities analysts at Jefferies L.L.C. said the plan faced legal hurdles. “Contract details between managed care organizations and health care providers are covered by confidentiality clauses, so forcing hospitals to post negotiated prices will require hard-to-achieve legislative action,” they wrote.

Last Updated 05/22/2019

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