Anyone who has tried to “shop” for hospital services knows one thing: It’s hard to get prices.
President Donald Trump on Monday signed an executive order he said would make it easier.
The order directs agencies to draw up rules requiring hospitals and insurers to make public more information on the negotiated prices they hammer out in contract negotiations. Also, hospitals and insurers would have to give estimates to patients on out-of-pocket costs before they go in for nonemergency medical care.
The move, which officials said will help address skyrocketing health care costs, comes amid other efforts by the administration to elicit more price transparency for medical care and initiatives by Congress to limit so-called surprise bills. These are the often-expensive bills consumers get when they unwittingly receive care that is not covered by their insurers.
“This will put American patients in control and address fundamental drivers of health care costs in a way no president has done before,” said Health & Human Services Secretary Alex Azar during a press briefing on Monday.
The proposal is likely to run into opposition from some hospitals and insurers who say disclosing negotiated rates could instead drive up costs.
Just how useful the effort will prove for consumers is unclear.
Much depends on how the administration writes the rules governing what information must be provided, such as whether it will include hospital-specific prices, regional averages, or other measures. While the administration calls for a “consumer-friendly” format, it’s not clear how such a massive amount of data – potentially negotiated price information from thousands of hospitals and insurers for tens of thousands of services – will be presented to consumers.
“It’s well intended, but may grossly overestimate the ability of the average patient to decipher this information overload,” said Dan Ward, a vice president at Waystar, a health care payments service.
So, does this new development advance efforts to better arm consumers with pricing information? Some key point to consider:
Q: What does the order do?
It may expand on price information consumers receive.
The order directs agencies to develop rules to require hospitals and insurers to provide information “based on negotiated rates” to the public.
Currently, such rates are hard to get, even for patients, until after medical care is provided. That’s when insured patients get an “explanation of benefits [EOBs],” which shows how much the hospital charged, how much of a discount their insurer received, and the amount a patient may owe.
In addition to consumers being unable to get price information upfront in many cases, hospital list prices and negotiated discount rates vary widely by hospital and insurer, even in a region. Uninsured patients often are charged the full amounts.
“People are sick and tired of hospitals playing these games with prices,” said George Nation, a business professor at Lehigh University in Bethlehem, Pa. who studies hospital contract law. “That’s what’s driving all of this.”
Some insurers and hospitals do provide online tools or apps that can help individual patients estimate out-of-pocket costs for a service or procedure ahead of time, but research shows few patients use such tools. Also, many medical services are needed without much notice – think of a heart attack or a broken leg – so shopping simply isn’t possible.
Administration officials say they want patients to have access to more information, including “advance EOBs” outlining anticipated costs before patients get nonemergency medical care. In theory, that would allow consumers to shop around for lower-cost care.