Yesterday afternoon, President Trump signed an executive order on "Improving Price and Quality Transparency in American Healthcare to Put Patients First," a broad-reaching plan which lays the framework for HHS and other federal agencies to issue regulations on hospital and insurer prices, patients' out-of-pocket costs, quality of care, bolstering research efforts, and expanding access to alternative coverage options.
Our three key takeaways
The order is meant to address many aspects of the health care system. In particular, it:
- Directs HHS to require hospitals and insurers to disclose their "secret" prices. The order directs HHS to propose within 60 days a regulation that would require hospitals and physicians employed by hospitals to post their prices publicly, including the "secret" prices they have negotiated with health insurers. The regulation should require providers to post the information "in an easy-to-understand, consumer-friendly, and machine-readable format using consensus-based data standards."In addition, the regulation should require hospitals to update their posted prices regularly and create a mechanism for HHS to ensure hospitals and providers are complying.
Guides HHS, other agencies to require pre-service medical bills. The order states that, within 90 days, the administration should solicit public feedback on how the government could require providers and insurers to give patients information on their expected out-of-pocket costs for services before they receive care. It also directs HHS secretary within 180 days to submit a report to the president on steps the administration can take to address "surprise" medical bills.
- Directs HHS, other agencies to increase patients' access to quality and price information. The order states that the HHS secretary should work with the secretaries of the Departments of Defense and Veterans Affairs to create a Health Quality Roadmap to align and bolster reporting of quality measures and data across federal health care programs.
- Tells HHS, other agencies to store de-identified claims data for research. Agencies have 180 days to implement a system that will increase researchers' and providers' access to de-identified claims data from government health care programs, such as Medicare and Medicaid.
- Calls on the Treasury Department to expand access to high-deductible health plans. Lastly, the executive order directs the Department of the Treasury within 120 days to issue guidance expanding the ability of Americans to enroll in high-deductible health plans (HDHPs) with health savings accounts. The executive order states that the HDHPs should cover low-cost preventive care, with no deductible requirement, that helps to maintain the health status of individuals with chronic conditions.
3 things to keep in mind about this order
While the order mandates significant changes to the hospital and health system landscape, it did not prove to be as specific or detailed as many feared. While a more specific order would have had immediate implications, the impact of the order will largely depend on how the agencies involved carry out Trump's mandate. The first indication of how far and how quickly the agencies will take his directive will likely come in July, when HHS releases the proposed Outpatient Prospective Payment System (OPPS) rule.
However, focusing too narrowly on the specifics of the order likely misses the larger picture: broader price transparency in health care is here to stay. While this particular order will likely face legal challenges, it's part of a larger shift in the industry. We think providers should keep three things in mind:
1. This is the latest evolution in an ongoing debate over what constitutes "meaningful" price transparency. When CMS finalized a rule last year requiring hospitals to post their chargemaster prices online, critics pointed out that these rates are a poor reflection of the prices patients actually pay for care. HHS immediately began soliciting input on whether they should require disclosure of insurer-negotiated rates—which are closer to real costs—as a next step. However, many have emphasized that even negotiated rates still fall well short of providing individual patients with a customized estimate of their own costs. It's perhaps not surprising, then, that the executive order goes a step further by seeking to require providers to provide customized out-of-pocket estimates for patients. However, it's notable that this requirement is in addition to—rather than instead of—disclosing negotiated rates, as it means providers are likely headed for a future reality in which they're required to provide multiple types of price information simultaneously.
2. Patients are the key target of this order, but they may not be its biggest beneficiaries. Much of the debate around what constitutes meaningful transparency is framed from the perspective of the patient. But there are at least three other potential consumers of pricing information: employers (who could use such information to exert downward pricing pressure on high-cost providers within their networks), other providers (who could use such information to exert upward pricing pressure in contract negotiations), and policymakers (who could use such information to advance price controls or value-based payment models). Each of these entities is arguably more empowered—and potentially more motivated—to utilize information about negotiated rates to influence pricing.
3. Even "imperfect" transparency solutions can still have a significant impact. While the debate around the best form of transparency and the optimal audience for transparency efforts will continue on, the industry's reaction to the requirement to post chargemaster pricing has demonstrated that even “imperfect” solutions can motivate action—at least some hospitals made minor modifications to their chargemaster pricing prior to posting them online. Regardless of how the implementation of this order is carried out, hospitals must take steps today to improve the patient financial experience.
How should you respond?
The fact that the government—and even the president—is specifically turning its attention to the issue shows that hospitals aren't doing enough to provide patients the financial information they need.
A lack of available financial information doesn't just hurt patients—it hurts hospitals too. Hospitals can excel on every aspect of the patient's clinical care, only to lose trust, goodwill, and loyalty with a sub-par financial interaction. When patients receive a sky-high bill that they weren't expecting, it's the hospital's name that's on the letterhead.
Knowing what they will owe prior to care is critical—in fact, our research shows that the number one thing patients want from the financial experience is a pre-service bill. But it's not the only important aspect of the financial experience. Information about price and obligation must also be coupled with access to financial counseling services and payment plans. Patients want price information so they can prepare and budget, and providing them with the tools they need to meet their obligations can be a significant driver of loyalty.
To help you understand what patients want in their financial experience, we're opening our Revenue Cycle Advancement Center resources to all Advisory Board members for a short time. First, read the results of our 2018 Patient Financial Experience Survey, for which we interviewed over 1,000 patients about what they want from the hospital when paying for medical care.
Get the Results
Then, download the eight tools in our Patient Financial Experience Toolkit to understand how to increase patient satisfaction in billing—and actually increase patient collections.
Download the Tools