The Trump administration recently released a new proposal requiring hospitals to fully disclose the charges for services, tests and procedures on their websites. The White House said the move is an effort to give consumers more power to price shop for their healthcare. Hospital charges are negotiated rates with insurers including Medicare.
The proposal is effective Jan. 1, 2020, and impacts more than 6,000 hospitals around the country that accept Medicare. The penalty for non-compliance includes fines up to $300 per day. The proposal expands the transparency level of requirements already in place. The government wants hospitals to include gross charges before they give discounts which are negotiated by insurance companies.
The proposal is an executive order signed by President Trump earlier this year in an effort to remove the veil that has hidden the fee negotiations from consumers regarding their healthcare costs.
U.S. Sen. John Boozman, R-Ark., told Talk Business & Politics he supports the proposal because consumers seeking Medicare deserve to know exactly what it is going to cost them.
“If you look at where we are going today, consumers want transparency for the things they purchase, including healthcare,” he added.
This position lines up with what Trump administration officials have said about the proposal. The main point being consumers don’t want surprises with their medical bills, given the costs of healthcare continues to increase pushing health insurance premiums higher for consumers and employers.,
“This proposal is now the most significant step any President has ever taken to deliver transparency and put patients in control of their care,” U.S. Health and Human Services Secretary Alex Azar said in a statement.
Because hospitals negotiate different prices for various services with all of their insurance payers, the proposal will require hospitals to make the true cost and the discounted rates for various insurance companies on roughly 300 services that patients would schedule in advance such as an MRI or other diagnostic tests. The fee negotiations are akin to seats on an airplane – every customer likely pays a different fare and they all end up at the same place.
The hospital and insurance industries are expected to rail against the proposal. Nationally, the CEO of America’s Health Insurance Plans said disclosing privately negotiated rates will make it harder to bargain for lower rates.
“Publicly disclosing competitively negotiated, proprietary rates will push prices and premiums higher — not lower — for consumers, patients, and taxpayers,” said Matt Eyles, CEO of America’s Health Insurance Plans.
The American Hospital Administration (AHA) is speaking out against the proposal.
“While we support transparency, this proposal misses the mark, exceeds the Administration’s legal authority and should be abandoned,” AHA President and CEO Rick Pollack said in a statement.
He said the plan could seriously limit the choices available to patients and fuel anti-competitive behavior among commercial health insurers.
Bo Ryall, president and CEO of the Arkansas Hospital Association, told Talk Business & Politics the state’s hospitals strive to provide top-quality care for all Arkansans. An essential part of that mission is providing access to any information or resources that can support patients in making the best decision about their care.
“Arkansas hospitals are committed to improving patients’ access to information about the price of their care; however, pricing for health care is complex and depends on many variables. CMS (Centers for Medicare /Medicaid Services) requiring that hospitals publicly post their chargemasters and other pricing information may not give patients the most useful information for making decisions about care,” Ryall said.
He explained a patient’s out-of-pocket costs are determined by his or her insurance carrier (or Medicare or other government payers), so simply stating hospital prices cannot tell the full story of patient costs.
“Communicating directly and effectively with patients as they take more responsibility for their care means creating common definitions and language to describe hospital pricing information, explaining how and why the price of patient care may vary, providing context for other factors of care – like quality and safety – that can impact their health outcomes, and directing patients to additional information and resources for finding financial assistance, when needed,” Ryall added.
He said Arkansas hospitals are working with other organizations to create tools for patients that will help them more easily navigate the healthcare system and come to a fuller understanding of their health insurance coverage plans.
Mercy Northwest officials told Talk Business & Politics it remains committed to providing information about prices to its patients.
“In compliance with existing regulations from the Centers for Medicare & Medicaid Services, patients can find pricing information for Mercy hospitals on our website,” said Eric Pianalto, CEO of Mercy Hospital in Rogers. “In addition, Mercy provides a personalized price estimate of standard charges and each patient’s actual out-of-pocket expenses at the time of scheduling or registration. This information may also be provided in advance upon request.”
He said Mercy is concerned the Trump administration’s proposal to expand the requirements will not help consumers make healthcare decisions or achieve a better understanding of costs.
“Every patient’s situation is unique, tied to their individual insurance benefits, making it difficult to determine a procedure or service’s cost without the insurance plan and specific patient information,” Pianalto said.
Larry Shackelford, CEO of Washington Regional Medical Center in Fayetteville, said he’s not surprised to see more proposals regarding price transparency given patients are seeking information about the cost of care before it is delivered.
“Washington Regional supports pricing transparency by providing account representatives to help patients determine their out-of-pocket expenses based upon their insurance benefits. However, with the current financial model, transparency is difficult since most hospital care is reimbursed as a single lump sum based upon diagnosis and the complexity of the condition,” Shackelford said.
He explained the variables often aren’t fully understood until closer to the time of discharge, which can create a challenge in providing transparency on the front end.
“Many healthcare experts fear such a proposal could lead to higher prices for consumers, as the published rates may result in a floor on pricing. When providers can see what their competitors are paid, there is little incentive to negotiate lower rates, or conversely, there may be an incentive to increase rates when a provider learns they are paid less than their competitors,” he added.
Shackelford said he expects to see legal challenges to the mandate of publishing contractual rates between private parties.
Pianalto said the proposal to expand these requirements will particularly hurt small hospitals, rural hospitals and hospitals in low-income communities by further limiting their ability to negotiate adequate reimbursement rates with insurers.
“This could ultimately reduce access to care in vulnerable communities served by these hospitals,” he added.