Shopping around for the best deal on the medical X-ray or a new knee? The Trump administration includes a plan for that.
On Monday, it proposed new rules that will provide consumers much more detail about the actual prices hospitals charge insurers. It comes down amid growing calls from consumer advocates, who argue transparency might help tackle rising healthcare costs. But the plan also offers the possibility to overwhelm patients with data.
Under the proposal, hospitals would be necessary to post the prices they negotiate with every insurer for just about every service, drug and supply they provide to patients, starting Jan. 1.
The move follows an executive order from the president in June. It immediately drew sharp opposition from hospitals and insurers, who made it clear they intend to fight the proposal – up to court if required.
Final rules might differ from the proposal – and the courts will be inspired to weigh in. But the move could help lift the secrecy that has long surrounded what patients, employers and insurers pay for medical services.
“As deductibles rise, patients have the right to be aware of cost of health care services so they can look around to find the best deal,” said Seema Verma, administrator of the Centers for Medicare & Medicaid Services, who announced the proposal Monday.
The proposal, however, raises at least three questions:
Will Consumers Use It?
Some consumers will take advantage of price information, although maybe not many, said pros who have studied patient behavior.
The amounts would be not the same as what currently exists on websites run by some insurers, hospitals and private businesses simply because they would be actual negotiated prices, not area averages, estimates or hospital-set “charges,” which are usually far greater than the negotiated rates.
Even so, “a many things can get in method of patients while using data,” said Lovisa Gustafsson, assistant v . p . at the Commonwealth Fund.
There might be just one hospital around, for example, or patients may be reluctant to switch should they have rapport with a specific hospital. Incentives to shop might be hampered, too, if a patient's share from the price of a procedure or test is small. Finally, only a portion of health care is “shoppable,” meaning patients have time to go searching and compare prices before they undergo the procedure or get the treatment.
Still, when price data is available, some patients – particularly those with high deductibles that weren't met – will shop and select a lower-priced provider, said Gustafsson.
Experts indicate consumer behavior in Nh, which posts price information by insurer online. Only a small percentage took advantage of the online look-up tool, but those who did saved money, according to a recent study by Zach Brown, a helper professor of economics at the University of Michigan.
Still, the brand new dataset proposed by the Trump administration might simply overwhelm many consumers.
Although the proposal necessitates the information be presented therefore it can be searched online, the amount of data is going to be huge.
Start using the fact that each hospital has tens of thousands of charges, from room fees to suture costs to the price of each tablet of aspirin. Then multiply that by the quantity of insurers that contract with each hospital and also the amount of data might be staggering.
Patients would need to know what tests, procedures, supplies as well as drugs they might requirement for confirmed hospitalization, then add them up. For every hospital they're considering.
To help consumers, the proposal would also require hospitals to supply info on 300 “shoppable services” – say knee replacement – and include the cost of all the related services that go by using it rather than expect patients to somehow try to add them up a la carte.
Will It Lower Prices?
The short response is maybe. But nobody knows for sure.
“We've never had price transparency, there isn't any evidence to point to precisely what it would do,” said Gustafsson.
In retail, having price information from shopping websites like Amazon helps drive prices down. But when the Danish government required concrete manufacturers to disclose negotiated prices, they increased, according to research trotted out by skeptics of the price transparency approach.
But is healthcare like retail or cement?
On one hand, having actual price information can provide self-insured employers and health insurers a greater submit negotiations, so they can demand better deals from hospitals. However it could also spur some hospitals to boost the prices when they think competition is obtaining a better deal from insurers.
Business professor George Nation, who studies hospital pricing at Lehigh University, lands on the side of the argument more price information can lower prices, especially if employers and insurers use it to demand steeper discounts.
“This cash is appearing out of employers' pockets,” he said. “They're likely to say, why, if Hospital B can do this for $300, why are you charging me $600? Justify your charge.”
While that will not operate in areas with a strong hospital monopoly, it's a start, he explained.
“You can't have price competition without knowing the price. And that's where we have been living.”
Will It Become Law?
Again, the reply is maybe.
The proposal might be modified following the administration reviews public comments, due Sept. 27.
After it's finalized, there may well be a legitimate battle.
Hospitals and insurers didn't wait to accept first shots.
Shortly following the proposed rule was released late Monday, their trade organizations released sharply critical statements. They've long opposed efforts to show their negotiated prices, which they say are trade secrets.
The Trump plan will backfire, said America's Health Insurance Plans: “Posting privately negotiated rates can make it harder to bargain for lower rates, creating a floor – not a ceiling – for that prices that hospitals would be willing to accept.”
We'll help you in the court, was the not too thinly veiled threat that came from the American Hospital Association, which said the proposal “misses the objective, exceeds the administration's legal authority and should be abandoned.”
But Medicare administrator Verma was unfazed. When asked by reporters concerning the potential for a legitimate battle within the proposal, she said, “We're not afraid of that.”
Still, around the legal front, it might get complex.
Currently, the administration is backing a case from 18 red states that are seeking to possess the entire Affordable Care Act overturned, including, presumably, any authority it gives the administration to want hospitals to post prices.
Again, Verma was not worried: “If you will find any changes to the ACA, we'd work with Congress to keep what's working and obtain rid of what's not,” she said at the press conference.
Nation said the interest the proposal gets from industry backs his contention there might be something to it.
“The strength from the opposition is indication this might work to lower prices,” he said.