The Trump administration plans to release a sweeping proposal that would require hospitals to publicly disclose the discounted prices they secretly negotiate with insurance companies – a change intended to increase price transparency for patients shopping for care.
According to The Wall Street Journal, which first reported the news, the final rule will force hospitals in 2021 to report the rates they strike with individual insurers for all services, including drugs, supplies, facility fees and care by doctors who work for the facility.
The administration will also extend the rule to the $670 billion health-care industry, meaning that insurance companies, including Anthem and Cigna, and group health plans that cover employees will have to disclose negotiate rates and previously paid rates for out-of-network treatment in computer-searchable file formats, the Journal reported.
The proposal will likely face a legal challenge from hospitals and insurers, which have previously warned that transparency could actually force prices to rise because they would know the price that competitors offer, and therefore be unwilling to settle.
“Right now there is too much arbitrage in the system,” a senior administration official told the Journal. “There are a ton of vested interests who will oppose this. We expect to get sued.”
A similar health care transparency law in Ohio remains tangled in the legal web.
Still, the Trump administration contends that requiring hospitals to release the negotiated price is intrinsic to lowering costs. For instance, hospitals would need to disclose payer-specific charges for at least 300 shoppable services, 70 of which — including vaginal birth, colonoscopy and joint-replacement surgery, are mandated in the rule. Hospitals can select the other 230 services they post online.
If the 6,000 hospitals that accept Medicare do not comply with the proposed requirement, they’ll be slapped with a $300 fine each day.
Prices charged for health care vary dramatically depending on several factors, including whether a patient is in or out of the patient’s insurance network and what price the hospital negotiated with the insurance company. For instance, the cost of a mammogram ranges from $50 at a hospital in New Orleans, to $86,000 at a hospital in Massachusetts, according to Clear Health Costs, which publishes information on health costs.
By making those prices available to consumers, the Trump administration argues that hospitals will be under more pressure to compete, eventually causing prices to fall.
According to a September study conducted by the Kaiser Family Foundation, employer health-plan deductibles are outpacing wage growth and have increased to an average of $1,655 for a single plan. On average, workers contribute $6,015 toward the cost of coverage.