Healthcare Fights the Trump Administration Over Pricing

By DirectorCorps

February 4, 2020 Healthcare Regulatory

The efforts of President Donald Trump’s administration to force healthcare providers such as hospitals and drug makers to disclose pricing isn’t going down without a fight.

The Trump administration tried to overturn a lower court ruling against its plan to make pharmaceutical companies disclose list prices, or what pharmaceutical companies charge before negotiated discounts with hospitals and insurance companies, in advertisements. But the appeals court judges hearing arguments in the case recently sounded skeptical, according to The Hill.

“The problem is the cost of prescription drugs. I don’t see this as a solution to the problem,” said Judge Karen LeCraft Henderson. The list price “is not the price I’ll ever pay,” she said. “Why is that not adding confusion?”

Hospitals also are suing the government over separate rules requiring them to publish the discounted pricing they offer insurers for services. The American Hospital Association, among others, argued before the US District Court in Washington in December 2019 that the rule is unlawful and requires hospitals to disclose private negotiations with insurance companies in violation of their First Amendment rights. The new rule is scheduled to go into effect in 2021.

A third rule would compel insurance companies to allow patients to get advance estimates of their costs before going to a hospital or a doctor. Insurance industry groups have asked for more time to comment on that proposal.

Underpinning these rules are assumptions that greater price transparency leads to lower prices for consumers. It sounds reasonable to assume that it does, but the answer to that question is complicated.

“We have a reasonable amount of experience in the commercial market that suggests most people do not shop for lower-cost healthcare services, even when pricing information is made available to them,” Caroline Pearson, senior fellow at NORC-University of Chicago, told the news site Vox. It’s hard to shop for healthcare. Insurance plans don’t encourage customers to shop for the best price. Most patients aren’t medical experts and much of their care is unplanned. And patients value advice from doctors they trust, relying on referrals to see specialists. These factors could diminish patients’ power over pricing.

Vox reports that hospitals may simply chose not to comply with the new rule, facing a penalty of just $300 per day for noncompliance.

There’s also a chance that greater transparency will increase prices, as consumers sometimes see higher prices as a reflection of quality. And hospitals that give discounts to certain insurers may be less likely to do so when their pricing becomes public.

As Kim Buckey, vice president of client services at DirectPath told Healthcare Finance, “This will be tied up in the courts for years. No way will hospitals and insurers give up ‘competitive’ information without a fight.”