Managed Care (PPO) Prices May Be Secret No More Under Trump Proposal

The end of PPO’s may be coming to an end sooner than we thought…………..

Hospitals Would Have to Reveal Discounted Prices They Give Insurers, Under Trump Rule

The proposal is part of the administration’s push to bring more transparency to health care markets.

By Reed Abelson and Abby Goodnough

July 29, 2019

The Trump administration on Monday said it would begin forcing hospitals to publicly disclose the discounted prices they negotiate with insurance companies, a requirement intended to help patients shop for better deals on a range of medical services, from hip replacements to CT scans.

The plan, issued as a proposed federal rule, would take effect in January, but would likely be challenged in court by an industry that has long held such rates secret.

“The reality is in every other part of our economy you can get pricing information, but somehow in health care, which is arguably some of the most dollars that we spend, you can’t,” said Seema Verma, the administrator for the Centers for Medicare and Medicaid Services, announcing the proposed rule. “We’re trying to change the paradigm.”

Administration officials and others have criticized hospitals and insurers for keeping the deals they strike a secret, making it impossible for patients to seek less expensive places to get care. They argue that by making public the actual prices that insurers pay — and not just the standard list prices for various services, which the Trump administration started requiring hospitals to post earlier this year — hospitals will be under more pressure to compete. Over time, prices will drop, Ms. Verma predicted.

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After failing to carry out the long-held Republican Party goal of repealing and replacing the Affordable Care Act, the Trump administration has made medical and drug prices a focus of its health policy. Monday’s announcement is part of a broader program to make information about health care pricing and quality more readily available to patients, and it fleshes out President Trump’s executive order from last month.

But some economists argue that posting negotiated prices is meaningless because it does not tell patients their actual out-of-pocket costs. Patients with insurance don’t pay the full price of a procedure; how much they owe depends on the deductible and co-payments in their health plan.

Pricing information also does little to help patients determine the quality of an individual doctor or hospital. “This is not the information that patients want or need,” said Tom Nickels, an executive vice president at the American Hospital Association.

The proposal, if implemented, has the potential to rock the health care industry, which critics argue thrives on the secrecy of the negotiations between hospitals and insurers. Both groups have objected to making public what they consider proprietary information, and they are expected to mount legal challenges to any mandated disclosure. In Ohio, a state law requiring price transparency that was passed two years ago is still mired in the courts.

Both the hospitals and insurers argue that disclosing prices would lead to higher costs, not lower ones, because each institution would know the prices of its competitors and could be reluctant to settle for less.

“Publicly disclosing competitively negotiated, proprietary rates will push prices and premiums higher — not lower — for consumers, patients and taxpayers,” said Matt Eyles, the chief executive of America’s Health Insurance Plans, an industry trade group, in a statement.

Ms. Verma said requiring hospitals to post negotiated prices on the internet, in a searchable format, is becoming more important as many Americans’ health insurance deductibles — the amount they have to spend on medical care before their coverage kicks in — steadily grow. She acknowledged, however, that the prices would not help people understand how much they would personally owe.

Asked what legal authority the administration had to require hospitals to post negotiated rates, Ms. Verma cited a provision of the Affordable Care Act — a law that the Trump administration is supporting efforts to overturn in court — that requires hospitals to make public a list of standard charges.

Another attempt by the Trump administration to create transparency in health care prices — a requirement that pharmaceutical companies disclose the list price of their drugs in their television ads — has been put on hold by the courts. A federal judge ruled earlier this month that the Department of Health and Human Services exceeded its regulatory authority with the rule, which was seen as largely symbolic since list prices are not what patients typically pay.

Reed Abelson covers the business of health care, focusing on health insurance and how financial incentives affect the delivery of medical care. She has been a reporter for The Times since 1995. @ReedAbelson

Abby Goodnough is a national health care correspondent. She has also served as bureau chief in Miami and Boston, and covered education and politics in New York City. She joined The Times in 1993. @abbygoodnough

 

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