President Trump signed an executive order in June that could force price disclosure in health care. Insurers, doctors, and hospitals would have to reveal the secretly negotiated rates they pay for services or charge for them. A month later, the Centers for Medicare and Medicaid Services proposed a rule requiring hospitals to make more price information publicly available. The lack of price transparency behind these efforts is the driving force behind my company — but even if it means taking attention away from what we’re doing, I wholeheartedly support these moves.
The order is part of a growing movement on the federal level to increase transparency in health care. While the executive order and the president who signed it don’t enjoy universal support, this is issue is worth putting politics aside for the greater good. Increasing transparency in health care is beneficial for consumers and represents a step forward in fixing a broken health care system.
When talking about political issues, including health care, it’s easy to get lost in the national scale — the greater the scope of a problem, the more abstract it becomes. But for the millions of Americans who have struggled to find the right care or have been shocked at surprise medical bills, it is a personal issue. And I’m one of them.
When I was 19, I was diagnosed with hereditary hemochromatosis. If left untreated, it leads to dangerously high iron levels that can damage tissues and organs. Because it was diagnosed early, I’ve been able to manage it well, so it has caused little interruption to my day-to-day life. But as a rare and preexisting condition, it has made finding affordable health care and insurance extremely difficult — and the industry-wide smokescreen obscuring prices and care quality hasn’t helped.
Blindly navigating a broken system
As an entrepreneur, I’ve seen (and experienced) how the lack of price transparency in health care stymies efforts to guide patients and consumers toward higher-quality and more affordable care. Removing that roadblock is an interesting problem to solve because in virtually every other major category of consumer spending, readily available tools exist to guide cost-saving decisions.
Google Flights, for example, gives a clear view of ticket prices to specific destinations, not only on the day you’re planning to travel but also on the days before and after. Yelp offers an overview of the cost and quality of restaurants, making the act of going to a restaurant and being disappointed by subpar food and sky-high prices less and less likely. There’s even transparency in real estate, with services such as Zillow that give context for house prices in a neighborhood.
Health care, on the other hand, shields and distorts its prices. A doctor at Facility A could charge a few thousand dollars to provide a service, while a doctor at Facility B down the street and around the corner could charge a few hundred dollars for the same service. This gap in prices could be the difference between a patient staying on top of his or her bills and falling into debt.
Opacity about the quality of care also convolutes the issue. High-cost facilities, which many people assume give the best care, can have low or failing safety scores. How can we expect customers to have confidence navigating the health care system when something that seems to be as simple as picking a care provider turns out to be a risky game of chance?
No universal transparency solution
Although a lack of pricing transparency imperils patients’ financial well-being — and low-quality care threatens them physically — finding a way to solve the issue is less straightforward than the president’s executive order makes it out to be. Among the most frequent arguments against the executive order is that a requirement to disclose what hospitals and doctors charge insurance companies could violate contracts between providers and insurers. But think about that for a minute: Such criticism essentially says that revealing more information to consumers would hurt the insurers who cover them and the providers who care for them.
As things stand now, two patients who receive identical services at the same facility can end up paying wildly different prices depending on the contracts with their respective insurance companies. That might make sense for insurers, providers, or facilities, but it doesn’t make sense for patients. If there are big price differences for the same services within or between facilities, patients should be able to know it.
In fact, contracts between insurers and providers contain anti-steering and gag clauses that are specifically meant to limit the amount of information people have about costs. The privately negotiated rates in these contracts not only obscure which providers or facilities charge more for their services, but they also hide which insurers are more costly. Without that information, consumers are unable to make informed decisions about their health care, and employers that purchase plans for their workers are left guessing.
That’s why my company and other entities, including CMS, are working hard to tackle this problem from multiple angles. My co-workers and I have spent more than six years collecting billions of health insurance claims to be able to make this information more transparent and accessible for anyone who interacts with the health care system. While we’re far from having all the data we need, moves by the Trump administration could bring the industry one step closer.
Clearing the confusion to move forward
The executive order and CMS’ response are a positive start. But more needs to be done to ensure that there are people or organizations responsible for making sure hospitals, providers, and insurers are held accountable. The administration needs to execute on its commitment to transparency by using its power to open up more health care data from hospitals, providers, and insurers alike, and curtail the kind of back-door dealing that obfuscates prices. Voters also have a responsibility to hold policymakers accountable.
In most industries, higher prices usually correspond with higher quality. But that isn’t necessarily the case in health care. Americans deserve to know what they are paying for when it comes to health care and why, so they can use that knowledge to make more-informed decisions.
Regardless of the outcome of the executive order and any related legislation or regulations down the road, there’s always more that employers, consumers, and other entities can do to take back health care from the secret dealings of insurers. Employers, for example, can offer onsite clinics with a clear pricing structure or opt for alternative, more transparent plan designs like reference-based pricing.
While many of the president’s policy decisions are controversial, this shouldn’t be one of them. It’s past time for price disclosure. The president’s efforts in this area should be supported and furthered to help reveal — and begin to repair — cracks in the health care system that have existed for too long.
David Vivero is the co-founder and CEO of Amino, a health care financial wellness platform.
I think the everyday american is more concerned with transparency with the medication they pick up at their local
pharmacy. This would entail PBM’s being transparent. Will PBM’s ever be transparent ? NO ! Never ! The reason for this
is that if PBM’s were transparent, everyone would see how much they’re stealing from every one of their clients!
The New York City Transit Authority just canceled their contract with one of the largest PBM’s because they were
sent a bill for 20 million dollars for administration fees , after 3 months ! When the PBM was asked about this they said
it was proprietary ! Can you imagine the balls these PBM’s have !! Nothing will change in this country until the
PBM’s fleecing of America is addressed.
Theoretically, this might work. But, as usual, human behavior is a difficult thing to predict, especially when it involves printing prices of medical services or putting them online.
I did not see much data to support the hypothesis in this piece. But there are plenty in this article:
The research is pretty pessimistic about the affects of price transparency on healthcare costs. Patients don’t have a clue where to find it, how to interpret it, how to balance it with other things like quality of care and health, and why go against the advice of their doctors anyway? Not to mention if the insurer pays anyway.
Finally, evidence is not a big factor in the Trump administration‘s policy decisions.
What side? The side of someone pretending of doing something, when in reality working to keep everything the same?
Exactly, competition brings down prices and that starts with transparency. Recently after a car accident, Blue Cross paid $5700 for a surgery that had a “retail” price of $119,000, so I kept asking why and who paid the retail price. Most common answer is we write that off but in business you don’t just write off anything not a loss so who pays the $119,000? Finally a hospital administrator told me that a patient with no insurance cannot be charged interest on services in our state on payment plans so they build the interest in the retail price. No wonder so many uninsured go into bankruptcy! I think most people could manage payments on $5700 verses $119,000. I would love to hear if this is normal in the industry nationwide or just this instant.
While price transparency may not solve the problem, how can you think it will make it worse? As a consumer, this is the only place I can think of where I am expected to commit to paying a charge without knowing the price. How can it hurt me to be able to choose between my local hospitals when it is time for a knee surgery? Or to know that the anesthesiologist that day is not covered by my insurance? Wouldn’t those factors alone help the consumer? It appears that most of the opposition to this seems to be about Trump or in support of the status quo, not concerns that are significant to the consumer.
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