Shared from the 6/25/2019 Arkansas Democrat-Gazette eEdition

President signs order on care-cost disclosure

Driving down prices is goal, he notes

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AP/CAROLYN KASTER

President Donald Trump receives applause at a signing ceremony Monday at the White House as he holds up the executive order calling for upfront disclosure by hospitals of actual prices for tests and procedures.

WASHINGTON — President Donald Trump signed an executive order Monday that calls for upfront disclosure by hospitals of the actual prices for common tests and procedures to help keep costs down.

Trump’s order also requires that patients be told ahead of time about their out-of-pocket costs, such as deductibles and co-pays, for many procedures.

Little will change right away. The executive order calls for a rule-making process by federal agencies, which typically takes months or years. The details of what information will have to be disclosed and how it will be made available to patients must be worked out as part of the regulation-writing process. That will involve a complex give-and-take with hospitals, insurers and others affected by the rules.

Trump’s order, if it survives the federal rule-making process and any 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.

“For too long, it’s been virtually impossible for Americans to know the real price and quality of health care services and the services they receive,” Trump said at the White House. “As a result, patients face significant obstacles shopping for the best care at the best price, driving up health care costs for everyone.”

Health and Human Services Secretary Alex Azar told reporters earlier that the order “will put patients in control by increasing choice and competition.”

Hospitals were skeptical of the move, 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.

The health insurance industry said that disclosing negotiated prices will only encourage hospitals that are now providing deeper discounts to try to raise their rates to match the top-tier facilities.

“Publicly disclosing competitively negotiated proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients, and taxpayers,” Matt Eyles, head of the industry group America’s Health Insurance Plans, said in a statement.

Lack of information on health care prices is seen as a widespread problem. It’s confusing for patients, and experts say it’s also one of the major factors that push up U.S. costs. Prices for the same test or procedure, in the same city, can vary widely depending on who is performing it and who is paying the bill. Hospital list prices, which are available, don’t reflect what they are paid by insurers and government programs.

The Federation of American Hospitals, representing for-profit facilities, warned that if the Trump administration regulations take the “wrong course,” they may “undercut the way insurers pay for hospital services, resulting in higher spending.”

While the prices Medicare pays are publicly available, private insurers’ negotiated rates generally are not. Industry officials say such contractual information is tantamount to a trade secret and should remain private.

Azar pushed back against that argument, saying insurers do ultimately disclose their payment rates when they send individual patients an “explanation of benefits.” That’s the technical term for the form that patients get after they’ve had a procedure or seen the doctor.

“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. [It] contains the list price … the negotiated rate … and what your out-of-pocket is,” Azar said. “This is not some great state secret out there.”

Patients should have that information ahead of time to help them make decisions, he added.

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, the order says.

Trump’s executive order also calls for:

Expanded uses for health savings accounts, a tax-advantaged way to pay health care bills that has long been favored by Republicans. Coupled with a lower-premium, high-deductible insurance plan, the accounts can be used to pay out-of-pocket costs for routine medical exams and procedures.

A plan to improve the government’s various quality-rating systems for hospitals, nursing homes and Medicare Advantage plans.

More access by researchers to health care information, such as claims for services covered by government programs like Medicare. The data would be stripped of details that could identify individual patients.

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.”

In a comment letter to regulators, the American Hospital Association warned last month that if rates were made public, “Health plans would know what every other health plan was paying and could use that information indirectly to collude and drive prices below competitive levels,” potentially putting struggling hospitals out of business.

The executive order is the third relating to health care during Trump’s time in the White House. The first, issued hours after he took office, instructed agencies to look for ways to lessen regulations that Barack Obama’s administration had written under the Patient Protection and Affordable Care Act. The second, in October 2017, directed officials to foster inexpensive types of insurance allowed to skirt the Affordable Care Act’s required benefits and consumer protections.

The idea that patients could become shrewd health care shoppers was the premise of conservative health policies in the 2000s that expanded the use of so-called consumer-driven health plans. Those paired high deductibles with tax-favored health spending accounts. Research on the effects of high deductibles has shown that patients cut back on care but don’t do a good job of choosing between services that are beneficial and wasteful.

Information for this article was contributed by Ricardo Alonso-Zaldivar of The Associated Press,by John Tozzi of Bloomberg News and by Amy Goldstein of The Washington Post.

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