Updated at 3:10 p.m. ET
President Trump has made price transparency a centerpiece of his health care agenda. Friday he announced two regulatory changes in a bid to provide more easy-to-read price information to patients.
The first effort targets hospitals, finalizing a rule that requires them to display their secret, negotiated rates to patients starting in January 2021. The second is a proposal to make insurance companies show patients their expected out-of-pocket costs through an online tool. That proposed rule is subject to 60 days of public comment, and it's unclear when it would go into effect.
"Our goal is to give patients the knowledge they need about the real price of health care services," said Trump. "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."
Administration officials heralded both rules as historic and transformative to the health care system.
"Under the status quo, health care prices are about as clear as mud to patients," said Center for Medicare & Medicaid Services Administrator Seema Verma in a written statement. "Today's rules usher in a new era that upends the status quo to empower patients and put them first."
As NPR has reported, hospitals are currently required to post their "list prices" online, but that information has been very hard to use and doesn't tell consumers much about what they are likely to pay. The new rule makes hospitals show what they really pay for services — not the list prices — and requires them to make that information easy to read and easy to access.
"I don't know if the hospitals are going to like me too much anymore with this," Trump said in a White House news conference Friday afternoon. "That's OK." He later added, "We're stopping American patients from just getting — pure and simple, two words, very simple words — ripped off. Because they've been ripped off for years. For a lot of years."
The second rule Trump announced Friday (which is a proposed rule, still subject to public comments before being finalized) affects insurance companies. It would essentially make insurers give patients their "explanation of benefits" upfront. It would require insurers to explain how much a service would cost, how much your plan would pay and how much you would owe — before the service is performed. The idea is that patients could use that information to shop around ahead of time for a better deal — assuming a better deal can be found, and the service isn't a medical emergency.
Certainly these rules would give patients more information than they currently have. The other promise of these rules — that they will bring down health care costs — is more of an open question.
In public comments for the hospital rule, hospitals argued that having to make their negotiated rates public would backfire — if a hospital is charging less than another one nearby, it could theoretically raise its price to more closely match its competitor's.
Secretary of Health and Human Services Alex Azar dismissed that argument on a call with reporters Friday morning.
"This is a canard," he said. "Point me to one sector of the American economy where the disclosure of having price information in a competitive marketplace actually leads to higher prices as opposed to lower prices."
Larry Levitt, executive vice president of the Kaiser Family Foundation, pointed out on Twitter that the penalty for hospitals that defy Trump's transparency rule was "quite weak."
"A maximum fine of $300 per day," he wrote. "The technical term for that is 'chump change.' I wonder how many hospitals will just pay the fine."
There's also an open question about whether these rules will survive legal challenges. Another Trump administration proposal to show drug list prices in television ads was blocked in the courts.
"We may face litigation, but we feel we're on a very sound legal footing for what we're asking," Azar told reporters.
AILSA CHANG, HOST:
Health care reform is what President Trump wanted to focus on today. The administration released regulations to increase price transparency for patients. And he spoke about them at the White House.
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PRESIDENT DONALD TRUMP: Our goal was to give patients the knowledge they need about the real price of health care 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.
CHANG: All right, here to explain what these rules would do is NPR health policy reporter Selena Simmons-Duffin.
SELENA SIMMONS-DUFFIN, BYLINE: Hi.
CHANG: So two regulations getting rolled out here. Give us the basics on what these rules are.
SIMMONS-DUFFIN: So the first one targets hospitals. Right now there is technically a way to get a list of charges from hospitals. It's called a chargemaster. But it's really, really hard to use. You just basically drown in information, and it doesn't really tell you that much about the real cost of things. So what this rule would do would require hospitals to make an easy-to-use, easy-to-access, searchable tool that shows the real charges for services - in-network charges, out-of-network, even cash prices. And that would go into effect in January of 2021.
SIMMONS-DUFFIN: So the second rule affects insurers. Do you know, like, explanations of benefits that you get in the mail?
CHANG: Yes. Yes, yes, yes.
SIMMONS-DUFFIN: OK, so the idea is that you would get that up front before you go get a service. You would get something that tells you what it costs, whatever you're going to get...
CHANG: Yeah. Wouldn't that be nice?
SIMMONS-DUFFIN: ..What it costs, what the plan would pay and what you would owe at the end of it. And that's a proposed rule, so this kicks off a 60-day comment period. We don't know when it would go into effect. And the administration is saying that these two things put together is revolutionary and could transform health care.
CHANG: Revolutionary. Do you agree with that? I mean, how transformative would this be?
SIMMONS-DUFFIN: Well, it kind of depends. First, we don't really know what these tools are going to look like, how easy they will actually be to use. Second, what do you do with the information? Like, is there another hospital in your town that is offering a better price?
CHANG: Do you even have a choice?
SIMMONS-DUFFIN: Right. Exactly. If there is, then great; this information is useful. But it's not necessarily going to be useful for everyone. Of course, there are emergencies when you can't - you really can't shop around.
CHANG: Right. You don't have the time.
SIMMONS-DUFFIN: Right. So another promise of these rules is that it will lower health care costs. And that is a lot less clear. The argument from the administration is that once patients can shop around for better prices, hospitals will respond by lowering their prices to attract savvy consumers. But it's not - we just don't know if that's exactly how it's going to shake out when it hits the market.
CHANG: What I'm thinking is the hospitals and insurance companies, these are these two very powerful industries. Are they likely going to block these rules from going into effect?
SIMMONS-DUFFIN: They're definitely going to try. On a call with reporters this morning, administration officials basically said, bring it. They're ready to fight for these rules in court. They think they're on solid legal footing, that they have the authority to make these rules and enforce them. But several rules on health care that the administration has tried to put out have been tied up. Final rules never materialized. Things were withdrawn. One cautionary tale here is TV prices in ads. Do you remember drug companies were going have to put the list prices on the...
SIMMONS-DUFFIN: Yeah, so a judge blocked that and said that Health and Human Services did not have the authority to make drug-makers comply. We're going to have to wait and see what happens here.
CHANG: All right, that's NPR health policy reporter Selena Simmons-Duffin talking about two new regulations the administration hopes to roll out.
SIMMONS-DUFFIN: Thank you.
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