If there are businesses that are less transparent than hospitals and health insurance conglomerates, we can’t think of any.
Few folks can explain why health care is, in many cases, so much more expensive in this country than other industrialized nations. Or why consumers can’t get a simple rate sheet, for instance, on how much a hospital charges for an X-ray. Or why, for that matter, insurance companies won’t disclose the rates they negotiate with hospitals for, let’s say, cesarean deliveries.
Confronted by a wall of secrecy or a list of absurd excuses, the health consumer is left with little information with which to make informed health-care decisions when price is an important consideration.
President Trump issued two rules last Friday toward making the process clearer, all part of his Executive Order on Improving Price and Quality Transparency in American Healthcare. One rule attempts to lift the curtain on rates for 300 services that patients can schedule in advance. We have to wait until January 2021 for that rule to take effect.
The second, potentially more controversial and in draft form, would require most health plans that workers get through their jobs to disclose the rates that insurance companies negotiate with hospitals (and doctors in their networks) as well as what the plans pay doctors who are not in their networks.
According to a press release from the U.S. Department of Health and Human Services, this rule, if made final, would:
“Give consumers real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services, through an online tool that most group health plans and health insurance issuers would be required to make available to all of their members, and in paper form, at the consumer’s request.”
And “Disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers.”
Combined, these rules would let us all in on the muddy world of hospital and physician rate-setting and rate negotiations with insurance providers, which, to this point, take place mostly privately.
Good for the administration. We hope they stick to their guns. The moves are beneficial to consumers, but are already under fire from industry groups.
Joe Grogan, director of the White House Domestic Policy Council, told reporters last week that the rules will upend the status quo.
“Make no mistake about it, this rule today will irritate many vested interests in Washington, D.C.,” he said.
Of course, legal challenges are promised, with the two largest hospital trade associations saying they plan to sue. They claim that requiring the disclosure of privately negotiated rates will hurt competition and raise prices.
We think this is preposterous. Requiring hospitals to produce consumer-friendly rate sheets for various procedures, such as lab tests, imaging and outpatient visits, so consumers can make informed decisions will have the opposite effect. Adding more transparency as to how rates are negotiated, both in network and out, will allow competition and drive prices down. We think hospitals and insurance companies don’t want folks to see how they make the sausage.
Blue Cross Blue Shield Association President Scott Serota said that publishing negotiated rates “may have negative, unintended consequences — including price increases — as clinicians and medical facilities could see in the negotiated payments a road map to bidding up prices.”
More likely, the publishing of rates will spark discussion on how to lower costs, allowing hospitals opportunities to attract more patients and insurance companies the chance to lower premiums.
Innovators do best when operating with full information, and we know this is the case in medicine; the marvel of medical advancements and the improvements of procedures are proof of that. Innovation and efficiency are powerful levers, and we see these rule changes as setting those two forces free, allowing the marketplace to do what it does best.