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PA IN THE MEDIA

Hospital price transparency push draws industry ire, but effects likely limited

John Nicolaou, healthcare expert at PA Consulting, discusses healthcare price transparency and the US executive order signed by President Trump which calls for rulemaking to require hospitals and payers to release information based on their privately negotiated rates.

Click here to read the full Healthcare Dive article

The article notes that far-reaching rules mandating industry price transparency could mark a major shift, but experts are skeptical the efforts will meaningfully lower prices for patients without a more fundamental system overhaul.

President Trump's executive order signed Monday directs HHS and other federal departments to begin rulemaking to require hospitals and payers to release information based on their privately negotiated rates. Providers would also have to give patients estimates of their out-of-pocket costs before a procedure. The moves come amid efforts from the federal government and Congress to push the healthcare industry to address patient anger over high prices, particularly regarding what medical bills they can expect to receive.

Many details must still be worked out as HHS and CMS craft their proposals, but providers and payers were quick to condemn any notion of making negotiated rates public. A legal challenge to the rules is also likely.

Patients are wary of going against a doctor's advice to undergo a certain procedure or test, and to get it done at a certain facility. A difference in price may not be enough to sway them. Also, the healthcare system has so many moving parts and unique elements that understanding a medical bill and how the price was calculated is daunting, to say the least.

The executive order has two main directives:

  • Within 60 days, HHS must propose a regulation "to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in an easy-to-understand, consumer-friendly, and machine-readable format using consensus-based data standards that will meaningfully inform patients' decision making and allow patients to compare prices across hospitals."
  • Within 90 days, HHS and the Departments of Labor and Treasury must solicit comment on a proposal "to require healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care."

The order also outlines smaller steps, including a report from HHS on how the federal government and private companies are impeding quality and price transparency in healthcare and another on measures the White House can take to deter surprise billing. It also directs federal agencies to increase access to de-identified claims data (an idea strongly favored by policy analysts and researchers) and requires HHS to identify priority databases to be publicly released.

John says that consumers will need help deciphering whatever information is made available however. Reams of data could offer the average patient little to no insight without payer or third-party tools to analyze and understand the information.

He adds: "It starts the process, just publishing that information and just making it available. It's got to be consumable and actionable, and that's going to take a lot more time."

The order does require the information being made public be "easy-to-understand" and able to "meaningfully inform patients' decision making and allow patients to compare prices across hospitals."

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