Despite A Bumpy Road Ahead, Incremental Progress On Price Transparency

“the health care industry is strenuously resisting this drive for transparency. High-price providers fear public disclosure would force them to lower their rates, since many cannot prove they actually offer higher-quality care. Commercial health plans also fear transparent prices. It would erode their market advantage by enabling competing plans to demand similar rates from providers.

[..] Last November, the administration released separate rules requiring hospitals and health insurers to publish their privately negotiated rates for hundreds of non-emergency, “shoppable” services. Hospital groups are fighting in court to block the yet-to-be-enforced hospital rule, arguing that it’s overly burdensome and that the government lacks authority to require disclosure of what they call trade secrets.

Similarly, insurers strongly oppose the administration’s proposed rule mandating them to disclose their payment rates for providers both in and out of their insurance networks. They argue that price disclosure would hike health care spending because lower-price providers would see what their competitors charge and raise rates accordingly. The Trump administration is expected to soon issue a final rule for insurers and self-insured employer plans.

But a University of Michigan study last year undermined the insurers’ argument. It found that New Hampshire’s online program offering consumers medical price information led to rates for MRIs and other diagnostic imaging services dropping by 1 percent to 2 percent, with consumers and insurers saving 3 percent overall.

A federal judge in June upheld the rule. But the American Hospital Association appealed, and the US Court of Appeals for the District of Columbia Circuit is scheduled to hear arguments on October 15, 2020.

[..] Studies show, however, that most people don’t use that information [online tools for estimating out-of-pocket costs] to pick cheaper providers even when it’s available and a service is actually shoppable.

A more powerful approach is to give employers comprehensive price and quality data, says Christopher Koller, president of the Milbank Memorial Fund, a foundation focused on improving health. That will enable them to select lower-cost, high-quality providers for their health plan networks and exclude providers that don’t offer good value on cost and quality.

[..] Congress has to get involved to make transparency happen because more than 100 million non-elderly Americans are covered by health plans that can only be regulated by the federal government. Lawmakers should backstop the Trump administration’s court-endangered transparency rules by passing legislation requiring hospitals and health plans to publish their negotiated prices.

Legislation also should limit providers’ monopoly pricing power by capping hospitals’ and physicians’ out-of-network charges at a reasonable percentage of Medicare rates, perhaps 125 percent. That would weaken providers’ negotiating trump card of threatening to stay out of an insurer’s network. Rand estimated that would save up to $124 billion a year.

A more limited approach, but an easier political lift, would be for Congress to follow through on last year’s House-Senate bill to ensure that employers can access their own health plan’s price data, while providing federal funding for state all-payer claims databases. Even better would be legislation to require self-insured employer and union plans to submit information to state databases or to establish a federal claims database.”

Full post, Meyer H. Health Affairs Blog 2020.10.13