Transparent Prices Will Help Consumers and Employers Reduce Health Spending

September 27, 2019 stgblase

By Brian Blase

Advancing price transparency to help reform health care

High and growing health care spending and uneven quality of care frustrate consumers, employers, and taxpayers, increasingly crowding out spending on other needs. There is a growing sense that something must be done. All potential policy responses carry a risk of disruption, although some disruption can be warranted when the status quo is untenable. Price transparency is an area being explored by policymakers that carries a significant upside.

On June 24, 2019, President Trump signed an Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.1 The order called for the Secretary of Health and Human Services (HHS) to propose a regulation to require hospitals to post standard charge information. On July 29, 2019, HHS included this proposal in the annual Medicare Hospital Outpatient Prospective Payment System (OPPS) rule. The proposed regulation defines two types of standard charges: gross charges and payer-specific negotiated charges. The rule would require the information to be displayed on the Internet in a machine-readable file that includes a description of the item or service and a common billing code. The rule also proposes publicizing payerspecific negotiated charges for common shoppable services in a manner that is consumer friendly.2 The rule proposes new enforcement tools including monitoring, auditing, corrective action plans, and civil monetary penalties of $300 per day to enforce compliance with the new requirements.

While President Trump and his administration have signaled strong support for efforts to boost health care price transparency, many industry groups, particularly hospitals and insurers, have expressed deep opposition. They claim that negotiated rates are proprietary and that publicizing rates could enable price-fixing and put upward pressure on prices—the latter being an odd concern for providers.

Read the entire research paper here.

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