President Donald Trump signed an executive order Monday that would require price transparency from health care providers.
Specifically, the negotiated, rather than list prices of services.
It’s a move Michael Maron, CEO of Holy Name Medical Center, supports.
“As longtime advocates for greater transparency, Holy Name supports this initiative to allow consumers to see where health care dollars are being spent,” he told ROI-NJ on Monday.
“For decades, insurance companies and powerful provider systems have succeeded in keeping their negotiated rates veiled from public view using nondisclosure agreements and restrictive contractual gag clauses. In a fee-for-service market, these unpublished rates contribute directly to skyrocketing insurance premiums every year and have led to the proliferation of high-deductible health plans in an effort to keep health care affordable. The current market has become a complex system of secret deals and discounts between insurance companies and health care providers. The public deserves to know which hospital systems and health care providers are driving higher costs. If we want to effectively lower the cost of health care, we need a transparent and consistent methodology for both providers and insurers.”
In a March 12 letter to the U.S. Department of Health and Human Services, Maron argued about the increasing view of patients as customers in health care.
“We wouldn’t expect a consumer to shop for a new car or other major purchase without knowing the price, so how can we expect consumers to shop for health care when we allow insurers and providers to keep their reimbursement rates secret?” he wrote.
The executive order follows a similar logic.
“Shoppable services make up a significant share of the healthcare market, which means that increasing transparency among these services will have a broad effect on increasing competition in the healthcare system as a whole,” according to the executive order.
Stephanie Kennan, senior vice president of federal public affairs McGuireWoods Consulting in Washington, D.C., told ROI-NJ on Monday that the naysayers have a point.
“That still doesn’t necessarily tell you as a consumer what you need to pay, unless you’re going to be sitting there with a calculator and figuring out the coinsurance and the copayments, and what’s the deductible,” she said.
“I’m not saying transparency is a bad idea, it’s a very good idea, but there are lots of factors that go into a negotiated price. I’m not sure how helpful that information is to the consumer.”
One area where the transparency can help is for researchers to finally have access to the data.
But, at the end of the day, two things remain clear, Kennan said.
First, the executive order doesn’t specify many of the details the hospitals will need in order to post the prices.
Secondly, transparency as an idea is just the first step. There is more context and more information about how the health care system works that consumers will need to know before it becomes a true shopping experience — if at all.
“It’s a building block, but where are we building to?” Kennan said. “A lot of decisions go into how people shop for health care to the degree that they actually shop.”
Cathleen Bennett, president and CEO of the New Jersey Hospital Association said the organization has concerns.
“We have serious concerns that forcing the disclosure of negotiated rates would disrupt the longstanding balance of negotiations between health care providers and insurance companies,” she said in a statement Monday.
“Many experts say the change could reduce the incentives to compete on pricing, resulting in higher prices, not lower.”
Her comments were echoed by a number of industry experts, as well as Matt Eyeles, CEO and president of America’s Health Insurance Plans.
Eyeles also had concerns about the mandate’s effects on cost, as well as how it could conflict with the industry’s current pursuit of value-based care.
“We also agree that patients should have accurate, real-time information about costs so they can make the best, most informed decisions about their care,” he said.
“But publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients and taxpayers. As consumers’ bargaining power, health insurance providers work hard to negotiate lower prices, which result in lower premiums and costs. Competition experts, including the bipartisan Federal Trade Commission, agree that disclosing privately negotiated rates will reduce incentives to offer lower rates, creating a floor — not a ceiling — for the prices that hospitals would be willing to accept.
“Requiring price disclosure for thousands of hospital items, services and procedures perpetuates the old days of the American health care system paying for volume over value. We know that is a formula for higher costs and worse care for everyone. We should be accelerating our efforts to pay for health care based on value and quality.”
To read the executive order, click here.
