It’s been over a week since President Trump signed an executive order mandating hospitals to give patients prices for services based on their negotiated rates with insurers — enough time for industry experts to digest the news and analyze its ramifications for consumers and the healthcare system.
As with many political issues, opinions on the executive order are mixed. Provider and payer groups are generally against the order, claiming it could have the unintended effect of raising prices. Others, such as AARP, said it supported the efforts to create transparency and lower healthcare costs.
The order instructs the Department of Health and Human Services to issue a proposed regulation within 60 days requiring hospitals to “publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in an easy-to-understand, consumer-friendly, and machine-readable format.”
In addition, it instructs federal agencies to expand access for researchers to de-identified healthcare claims data from federal programs, and directs the Department of the Treasury to issue guidance to expand the availability of health savings accounts to pay for more healthcare services.
Some industry experts are guardedly optimistic about the intended effects.
‘A COMPETITIVE MARKETPLACE’
Leah Binder, president and CEO of Leapfrog Group, which famously ranks hospitals nationally based on quality and safety metrics, said it’s a positive development that the order directs federal agencies to lean into the idea of transparency.
“It also calls for new synching around health savings accounts,” said Binder. “Those are the tax-protected accounts people can set up to pay for high deductibles when people have high deductible health plans. So I like the direction that the executive order prioritizes on health savings accounts. It allows people to use them for a wider variety of services, but also allows people in high deductible health plans to be given more access to better care. If someone has diabetes or is managing diabetes, they should be able to get their insulin and other supplies and medications without having to pay down their deductibles first.”
Binder added that improving the quality of healthcare and lowering costs is a near-universal goal, and that competition may help in this regard.
“We don’t always know how to get there, but we know what works in other industries, which is a competitive marketplace,” she said. “Competition can drive prices down and quality up. That’s kind of fundamental. There are lots of hazards in that and things to watch for, but a core principle of any functioning economy is that competition can work.”
Binder cautioned, however, that price transparency alone might not be effective. It may, in fact, backfire and drive prices up if it’s not coupled with quality data for consumers.
“There’s no price for bad care,” she said. “If you get an MRI, for example, that gives you an incorrect diagnosis, and you have a surgical site infection and (spend) months in the hospital, that’s real money that’s really spent on the wrong things. It’s not a good value, ever. It doesn’t matter what price you got for the surgery or for the MRI. A huge amount of waste happens in our healthcare system. You have to be able to compete on quality as well as price.”
BInder acknowledged the criticism that price transparency violates privacy provisions with hospitals and health systems, which are put in place to reduce the chances of people gaming the system. But she said the industry needs to move beyond that.
“It doesn’t make any sense for the consumer,” she said. “What other industry says, ‘We’re going to tell you the price after you buy it?’ It’s absurd. It doesn’t work. We have to move beyond it, and I understand that’s difficult and can create unintended consequences. It’s going to require some pain and suffering to get to where we want to be, but we have to get there.”
SUPPORTING THE PATIENT JOURNEY
Robbie Hughes, founder and CEO of care pathway management software company Lumeon, said the executive order could help to advance the cause of value-based care — assuming it has its intended effect.
“What value-based care means is, I want as a consumer to get predictable, quality care for a predictable price,” said Hughes. “We end up with risk adjustment models, all these kickers and incentives to get people to do the right thing, but fundamentally the market needs a simple thing: For a certain amount of money, I should get predictable care at a predictable price.”
The executive order proposes what Hughes calls a “price master,” and if that happens, he said providers will first have to decide on what their prices are and then publish them. But that raises the obvious question: What’s the right price?
A consumer might conceivably research two different health systems and see two different prices for the same service, and naturally wonder why the prices are different at all. That forces them to consider what they’re getting for their money — a more modern building? A better overall experience? Patients will have to decide what is valuable to them.
“The purchaser of care can make decisions on what to pay for and what’s the value for them,” said Hughes. “At the core of all that, the wonderful thing is you’ve eliminated the unwarranted variation in care delivery. It’s forcing people to think for the first time about what the right way to deliver care is.”
There could be unintended consequences, though. According to Hughes, there could be a situation in which the healthcare industry mimics some of the tactics used by the airline industry, where there’s a set price for the core service, but then there are extra charges for things like parking. There are many ways in which the industry could introduce complexity and variability to get more money out of consumers once they’ve chosen a certain package of care. Eventually, said Hughes, the market will sort that out.
On the positive side, he said the industry will likely see more service line-based care delivery, ensuring the careteam works collaboratively and maintains consistency with patients.
“The way we see this is, the technology that people have on the ground today is fundamentally designed for accounting for what you did, and to a very limited extent to what you’re doing,” said Hughes. “That’s going to shift to bringing predictability to what you’re doing now and what you’ll be doing next. That’s a fundamental shift. This needs to support the patient journey all the way through on an enterprise basis.”
Other industry organizations are more pessimistic about the long-term effects of Trump’s executive order.
Citizen’s Council for Health Freedom contends the built-in language regarding data collection would negatively impact patient privacy.
“We appreciate the president’s focus on lowering medical costs, making prices transparent and expanding how the HSAs can be used,” said founder and CEO Twila Brase. “However, we are deeply concerned by the ‘Health Quality Roadmap,’ which will initiate a significant intrusion in the lives of half the American population and which we believe will lead away from individualized, personalized medicine.
“As the executive order states, the data will be used to go fishing for ‘patterns of performance of medical procedures that are outside the recommended standards of care,'” she said. “These third-party overseers who aren’t in the exam room will likely use the data to locate, identify and target physicians and other practitioners who do not conform to their preferred patterns of practice. Practitioners who practice according to the needs of their individual patients, not according to some standardized protocol approved by a third party whose only focus may be efficiency and cost-cutting, may be penalized.”
Shobin Uralil, co-founder and COO of health savings account provider Lively, struck a more optimistic tone.
“The recent executive order, focused on healthcare cost transparency, is the right step to drive better and more clear healthcare options for Americans,” she said. “Cost transparency will ensure Americans have better insights into their healthcare decisions and can accurately forecast their yearly out-of-pocket spending. The increased accountability on healthcare service providers will expose outrageous expenses and allow consumers to make both good healthcare and financial decisions when selecting services. To date, consumers have been forced to prioritize one over the other.”
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