Trump Administration Finalizes Rule, Proposes Another Related to Price Transparency Requirements For Hospitals and Insurers
Following an executive order issued by President Donald Trump in June, the Trump Administration today announced two actions to compel hospitals and insurers to provide patients with more information on the cost of health services prior to their utilization. The Trump Administration finalized a rule that requires hospitals to make public their secret, negotiated rates beginning in January 2021. By disclosing hospital standard charges, the Trump Administration contends, the public will have information necessary to make more informed decisions about their care, in turn increasing market competition, and ultimately driving down the cost of health services.
The finalized rule specifies that costs to be disclosed include negotiated prices as part of an insurer’s network, the amount hospitals are paid if care is out-of-network, and what the hospital would accept for the treatment if paid in cash. In announcing the finalized rule, Secretary of the U.S. Department of Health and Human Services (DHHS) Alex Azar claimed, “American patients have been at the mercy of a shadowy system. This shadowy system has to change. Today’s transparency announcement may be a more significant change to American health care markets than any other single thing we’ve done.”
The hospital industry has long kept cost information private, and hospital entities contend they should not be required to disclose what they consider proprietary information. In public comments, hospitals largely argued that disclosing their negotiated rates may backfire, leading hospitals that are charging less than a nearby hospital to raise their prices to more closely match the price of their competitor. Included in the rule for hospitals that do not comply with the regulation is a maximum fine of $300 per day, an amount that many experts find to be low. Legal challenges by hospital entities to the mandated price disclosures are widely expected.
The second component of today’s announcement by the Trump Administration is a proposed rule to require most employer-based group health plans and health insurers offering group and individual coverage to disclose to patients expected price and cost-sharing information through an online tool. The proposed rule, according to DHHS, is intended to drive more price-conscious decision-making among consumers and would encourage health insurers to offer new or different plan designs to incentivize consumers to shop for services form lower-cost, high-value providers. The proposed rule must undergo a 60-day public comment period, and it is unclear when the rule may take effect.
The full announcement related to the price transparency efforts from DHHS is available here.