New Rules Require Transparency in Health Care Prices

An 85-year-old patient is checked by a nurse on July 16, 2019, as he recuperates from open-heart surgery at the Rocky Mountain Regional VA Medical Center in Aurora, Colo. (Shawn Fury/VA Eastern Colorado Health Care System via AP)

WASHINGTON (CN) — How much did that flu shot cost, exactly? That’s the question health care patients in the U.S. may no longer have to ask, after the Trump administration announced new rules Friday that would require hospitals and insurers to disclose the actual cost of common medical procedures.

The Department of Health and Human Services rules coincide with an executive order President Donald Trump signed this summer that will require the pricing for most tests and procedures to be made publicly available by hospitals. The regulations also require insurers to disclose cost-sharing information with patients, beneficiaries and enrollees before they decide on a medical procedure.

Pricing will be made available to patients through an online system, the department said Friday. Insurers will be required to disclose their negotiated rates for in-network providers, which the government says will foster competition in the industry.

Hospitals will have to compile a patient’s individual charges showing itemized costs of procedures. The Trump administration notes that these prices will be displayed in a “consumer-friendly” manner and will also include the amount a hospital is willing to accept in cash.

The administration is finalizing this rule, which will also make pricing information publicly available in a variety of mediums. The changes for hospitals are expected to take place beginning in 2021, but it is unclear when insurers will have to comply.

Hospitals and insurers say the push for price disclosure goes too far, forcing them to share privately negotiated rates. Insurers also say the plan could make bargain providers charge more for their services.

The American Hospital Association said Friday it will sue over the hospital rule, claiming it exceeds the administration’s authority.

“Today’s rule mandating the public disclosure of privately negotiated rates between commercial health insurance companies and hospitals is a setback in efforts to provide patients with the most relevant information they need to make informed decisions about their care,” the group said. “Instead of helping patients know their out-of-pocket costs, this rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery.”

After they are finalized, the rules will allow the Centers for Medicare & Medicaid Services to impose a $300 per day fine on insurers and hospitals that do not comply with the listing requirements. The agency will also monitor and audit websites with pricing information.

CMS Administrator Seema Verma said that right now, health care prices are “about as clear as mud to patients.”

“Kept secret, these prices are simply dollar amounts on a ledger; disclosed they deliver fuel to the engines of competition among hospitals and insurers,” Verma said in a statement Friday. “Today’s rules usher in a new era that upends the status quo to empower patients and put them first.”

Health and Human Services Secretary Alex Azar said the American health care system deserves an “F” rating for its ability to be transparent about medical pricing. He said President Donald Trump’s promise to make the system more transparent begins with implementing the new rules.

“Today’s transparency announcement may be a more significant change to American healthcare markets than any other single thing we’ve done, by shining light on the costs of our shadowy system and finally putting the American patient in control,” Azar said in a statement.

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