Policy Alert: Transparency in Health Care Costs

Action: Executive Order “Making America Healthy Again By Empowering Patients With Clear, Accurate, and Actionable Healthcare Pricing Information”

What it does: The Order builds upon Executive Order 13877 Improving Price and Quality Transparency in American Healthcare To Put Patients First of June 24, 2019, which issued regulations that would require hospitals and health plans to deliver meaningful price information to consumers, and directs the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to  “take all necessary and appropriate action to rapidly implement and enforce the healthcare price transparency regulations issued pursuant to Executive Order 13877” within 90 days. In essence, it calls for greater enforcement of the 2019 Executive Order.

Key Insights

• The Order requires the Secretaries to ensure that hospitals and insurers disclose actual prices, not estimates, and work to make prices comparable across hospitals and insurers, including prescription drug prices.
• Prices can vary widely from hospital to hospital within the same region. In one scenario, a patient in Wisconsin was able to save $1,095 by shopping for two tests between two hospitals only 30 minutes apart. The President said that “[o]ur goal was to give patients the knowledge they need about the real price of healthcare services.  They’ll be able to check them, compare them, go to different locations, so they can shop for the highest-quality care at the lowest cost.”
• The 2019 order required health plans to share their negotiated rates with providers, their out-of-network payments to providers, and the prices paid for prescription drugs. The requirement was strongly opposed by hospital groups who challenged it in court, arguing that it forced them to disclose private negotiations with insurers, undermining competition and violating their First Amendment rights. Their claim was rejected by the court.
• While the Order was thus in effect under the Biden Administration, both a patients’ advocacy group and the HHS Office of the Inspector General suggested widespread noncompliance with the rules, with the Patients Rights Advocate group claiming that only 21.1% of hospitals were fully compliant with the rules last Fall.
• Nonprofit health organization KFF recently published a report on the challenges of effective price transparency analyses, highlighting how reported data often include “misleading and unlikely prices, inconsistencies, and other  oddities that pose significant challenges for researchers, industry and others seeking to make sense of the data.”