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How will the executive order on healthcare pricing transparency affect the industry?
President Trump’s recent executive order mandating more transparency in healthcare pricing comes out of a desire to lower healthcare costs. But just what will it do?
While the executive order itself contains few details, HHS Secretary Alex Azar says that his agency is being directed to draft rules that would "require health care providers and insurers to provide patients with information about the out-of-pocket costs they'll face before they receive health care services."
So what might this mean for the health executives, and for the healthcare industry as a whole?
Jay Wolfson, DrPH, JD, associate vice president, USF Health, says the move is very much in line with the President’s previous moves in the healthcare space, saying that the order is “part of what appears part of his classic strategy of throwing a series of boxing hooks and jabs intended to place the health care industry off balance. This is one of the President’s efforts to force the health care industry to take more public responsibility for health care costs.”
Wolfson says that this initiative alone won’t accomplish the goal of transparent pricing, but instead will be a part of a series of initiatives that all have a similar goal.
This is largely because, Wolfson says, “the requirement that hospitals publish what patients and insurers actually pay is not independently likely to reduce costs of care. For one thing, patients do not generally hospital-shop for their cardiac bypass or hip replacement procedures because they rely upon their physician’s hospital affiliation. Too, hospitals have dozens of separately negotiated payment contracts with third parties, so ALL of a hospital’s reimbursement amounts from all contracts would have to be publicized.”
Related article: Tackling True Cost Transparency in Healthcare
This would then create an administrative burden for hospitals, Wolfson says, as they would have to figure how and where to post the huge numbers of third payments-somehow turning that information into a form accessible and usable to patients.
There is also the problem of proprietary data, which Wolfson says will likely be the basis of hospital challenges to the rule. Hospitals will claim their data is filled with “confidential business processes and information distinctive to each hospital’s contractual negotiations, while the government will claim a legitimate and compelling state interest in publishing those data,” Wolfson says.
“Finally,” Wolson adds, “there is no demonstrated correlation between prices (costs to patients, or even the actual cost hospitals pay for their goods, supplies, and operations) and quality or outcome of care. Data on quality and outcome will be far more valuable in providing patients with useful data upon which to base decisions as to where they will go for the care they receive. And third parties should become far more proactive in representing the interest of their beneficiary members-something the ‘surprise billing’ rule will help to address.”