In a historic move, President Donald Trump announced Friday that hospitals will be required to disclose the rates they privately negotiate with insurers.
Part of a larger transparency push aimed at reducing health care costs, the controversial requirement has already raised the ire of the powerful industry. Four hospital groups quickly promised to file a legal challenge, arguing the rule exceeds the administration’s authority.
The rule is the latest in a series of steps the administration has taken to show what Trump is doing to lower health care costs — a key concern among Americans and one of his main promises as he heads into the 2020 campaign.
Under the final rule, which stems from an executive order Trump issued this summer, hospitals will have to make public by 2021 the rates they negotiate with insurers and the amounts they are willing to accept in cash for an item or service. In addition, they must provide this information in an online, searchable way for 300 common services, such as X-rays, outpatient visits, Cesarean deliveries and lab tests.
Hospitals that don’t comply will face a civil penalty of up to $300 a day.
Also, the administration released a proposed rule that would require insurers to provide consumers with estimates of their out-of-pocket costs for all health care services through an online tool. Carriers would have to disclose their negotiated rates for in-network providers as well as the allowed amounts paid for out-of-network providers. This proposal was prompted by feedback that consumers are more interested in what they are on the hook for based on their insurance plans’ deductibles and copays or coinsurance.
Health and Human Services Secretary Alex Azar said this announcement may be “a more significant improvement to American health care markets than any other single thing the Trump administration has done.”
“American patients have been at the mercy of a shadowy system with little access to the information they need to make decisions about their own care,” Azar said. “This shadowy system has to change.”
The secretary added that he believes the changes will survive any legal challenges from hospitals.
Negotiated rates are closely guarded secrets, though they are eventually revealed to patients when they receive explanations of benefits from their insurers. That information should be available before the person receives care, administration officials say.
The administration argues that increasing price transparency will lead to a more competitive marketplace.
Some health policy experts, however, say the rule will not help many consumers because people typically don’t shop for medical services. The industry argues that it could make prices rise since the players will know what deals their rivals negotiated.
“Unfortunately, the rules the administration released today will not help consumers better understand what health services will cost them and may not advance the broader goal of lowering health care costs,” said Scott Serota, chief executive of the Blue Cross Blue Shield Association.
Several of the President’s other efforts to reduce health care costs have been thwarted, including requiring drug makers to post their list prices in television ads. A district judge nixed that rule over the summer.
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