March 8, 2019

HHS may require hospitals to disclose 'secret' prices negotiated with insurers

Daily Briefing

    HHS under a proposed rule published Monday is seeking public comments on whether it should require health care providers to disclose the now-secret prices they negotiate with health insurers.

    Your cheat sheets for understanding health care's legal landscape

    Providers and insurers typically negotiate the prices that insurers pay for medical services and most often keep those prices confidential, according to the Wall Street Journal. Hidden discounts and charges are pervasive in the commercial health care market and often keep employers, patients, and policymakers from identifying which health care systems and providers are driving up health care costs, the Journal reports.

    Proposal details

    The request is part of a proposed rule HHS first released last month that aims to give patients greater access to their electronic health information and to call out health care providers who impede health data sharing.

    HHS in the proposed rule requested public comments on whether patients should have access to the prices providers have negotiated with insurers. The request serves as a "major step toward a possible rule that could require providers to release such information," the Journal reports. Regulators have said HHS has the authority to require price disclosures under the 21st Century Cures Act, according to the Journal.

    HHS is accepting public comments on the proposal until May 3.

    Implications

    According to the Journal, requiring providers to disclose the negotiated prices would end the longstanding industry practice of keeping the negotiated charges private and, for the first time, show the amounts insurers actually are paying for care. Such a requirement could provide patients with the information they need to make more informed health care decisions, the Journal reports.

    Don Rucker, HHS' national coordinator for health IT, said the proposal represents "an effort … to help put Americans back in control of price data." He continued, "Our interest is on how can we empower the American public to shop for their care and control it."

    If the proposal moves forward, HHS potentially could require hospitals to publish negotiated prices on public websites for consumers to reference before choosing their providers, the Journal reports. According to the Journal, such disclosure could lead:

    • Insurers to request the same discounts their competitors have reached with providers;
    • Providers to request the same payment rates their competitors have reached with insurers; and
    • Providers to lower their prices below the rates of their competitors to attract patients.

    Reaction

    Some hospital and insurer groups have criticized the proposal, saying negotiated payment rates are propriety information and that mandating their disclosure could violate antitrust and contract laws. Others have said the proposal is unnecessary because hospitals already must publish their list prices—although so-called chargemaster prices may bear little resemblance to the prices actually paid by insurers.

    Tom Nickels, EVP of government relations and public policy at the American Hospital Association, said, "Disclosing negotiated rates between insurers and hospitals could undermine the choices available in the private market. While we support transparency, this approach misses the mark."

    Chip Kahn, president of the Federation of American Hospitals, said the proposal would have to apply to insurers, too. Kahn said, "They'd need to bring insurers and payers into the equation because they have the data to determine for patients what their costs should be."

    However, patient advocacy groups praised the proposal.

    Caitlin Donovan, director of outreach and public affairs at the National Patient Advocate Foundation, said, "If this rule goes forward, it will be a huge step towards true pricing transparency and will finally allow patients to really see what their costs will be before a service—something that has rarely been possible before" (Armour/Wilde Mathews, Wall Street Journal, 3/7; Baker, "Vitals," Axios, 3/8; Haefner, Becker's Hospital Review, 3/7).

    Your cheat sheets for understanding health care's legal landscape

    book

    To help you keep up with the ever-changing regulatory environment, we recently updated our cheat sheets on some of the most important—and complicated—legal landmarks to include a brand new one-pager on the new tax law.

    Check out the cheat sheets now for everything you need to know about MACRA, the Affordable Care Act, antitrust laws, fraud and abuse prevention measures, HIPAA, and the two-midnight rule.

    Get the Cheat Sheets

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.

    X
    Cookies help us improve your website experience. By using our website, you agree to our use of cookies.