The thinking behind President Donald Trump’s executive order on Monday is that more transparency around health care costs will benefit patients. That sounds sensible but, as various experts cautioned, the details matter.
The White House is tasking federal agencies with writing regulations that try to reveal a lot of information that isn’t readily available, like how much insurers pay hospitals for services and how much patients will pay out of pocket before being treated.
“My Administration seeks to enhance the ability of patients to choose the healthcare that is best for them,” the executive order reads. “To make fully informed decisions about their healthcare, patients must know the price and quality of a good or service in advance.”
But exactly what kind of details hospitals and insurers have to disclose is still being worked out. The administration has a few months to hammer out the particulars, which officials told reporters, “leaves room for us to … work with industry.” So far, the industry is pushing back against the executive order, and specifically, the requirement for hospitals and the doctors they employ to post negotiated prices.
“The President’s executive order leaves room for more or less health care price transparency, depending on how the regulations are written,” said Kaiser Family Foundation’s Larry Levitt on Twitter.
The administration calls for “consumer-friendly” information. Depending on how the administration governs the rules, hospitals might have to share individual or aggregate rates. Currently, patients with insurance get this information after being hospitalized, through “explanation of benefits (EOBs).”
“[P]ublicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher – not lower – for consumers, patients, and taxpayers,” said president of America’s Health Insurance Plans. Similarly, the president of Federation of American Hospitals said, “If implementing regulations take the wrong course… it may undercut the way insurers pay for hospital services resulting in higher spending.”
Meanwhile, polls say most consumers just want lower out-of-pocket costs for health care, something this order doesn’t sufficiently address.
To get further insight into the executive order, ThinkProgress reached out to Dan Mendelson, who served in the White House Office of Management and Budget during the Clinton administration as the associate director of health. He’s also founder of health care consulting firm, Avalere Health.
Mendelson sounded more impressed by other overlooked provisions of the executive order, such as the provision directing the health and veteran departments to release a strategy on standardizing “quality measurements.” He cautioned that more information about negotiated prices alone won’t “revolutionize the patient experience” and “patients should not expect it to be transformative.”
So how helpful will more transparency be? Mendelson explains, in a lightly edited interview:
Is this information helpful for patients, insured and uninsured?
I think it’s somewhat helpful… But to me the most important thing is that it gets providers starting to talk about costs with patients. So by virtue of putting this information out, the providers ultimately have to own the fact that they’re charging for their service and that the patients are paying. And that’s the mindset that I think the department is trying to establish in provider markets.
“Co-pays for drugs under Medicare Part D has gone up dramatically over the course of the last five years and the [executive order] doesn’t do anything with it.”
It’s just that the complexity of the medical system does make it hard for consumers who are trying to figure this stuff out — either because they have high-deductible plans or because they are responsible for their costs because they lack insurance.
The industry is already pushing back hard against the executive order. What are the chances these regulations are watered down? Looking at the Federation of American Hospitals, they want the administration to focus on out-of-pocket costs as opposed to negotiated prices.
I think that the concerns being expressed by the hospitals are legitimate concerns about the way prices are negotiated today. By being more transparent to the consumer, the providers are going to have to change the way that they engage in negotiation with plans. I think it is quite likely that when the department moves to implement this regulation, that there will be a very heavy level of pushback from providers. It is possible that it could get changed in a significant way.
“It’s not going to be a panacea for consumers.”
That said, I think that the secretary is very focused on disclosure. And when he gets focused on things that are important to him, he tends to stay that way. I would guess that a year from now, we are going to be learning a bit more through these price disclosures about the average prices that are being charged by these providers.
Does the executive order adequately address patients’ concerns about rising out-of-pocket costs?
Look, there are so many things that the executive order does not address that are of deep concern to consumers. So for example, co-pays for drugs under Medicare Part D has gone up dramatically over the course of the last five years and the EO [executive order] doesn’t do anything with it. So there are many aspects of out-of-pocket costs for consumers that aren’t addressed by the EO.
That said, an executive order by its very nature is limited in terms of the authority — can’t change legislation. I think you have to see it for what it is. And they characterize it as a step forward for transparency, which I believe that is a step forward in terms of what is being required. I do think that it is valuable in that it does stimulate conversation about costs. But it’s not going to be a panacea for consumers that are struggling with high and rising costs.