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Analysis: Trump’s hospital costs transparency executive order faces uphill battle
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Though some major medical societies applauded President Donald J. Trump’s executive order on June 24 directing HHS to require hospitals upfront disclosure of prices, it faces difficulty coming to fruition, medical, legal and economic experts told Healio Primary Care.
Order seeks 'transparency'
The executive order states that HHS will issue a rule within 60 days that requires hospitals to publicly reveal the cost patients will pay for services in an “easy-to-understand, consumer-friendly, and machine-readable format using consensus-based data standards that will meaningfully inform patients’ decision making and allow patients to compare prices across hospitals.”
The executive order also gives HHS 90 days to seek proposals to make information on out-of-pocket spending more accessible to patients before receiving care.
“[This] will create unprecedented transparency about health care prices and provide this information to the American people for the first time ever,” Trump said at a press conference announcing the executive order.
“You’ll be able to search out for the right doctor. And it really is, in a true sense, the opposite of Obamacare. You’ll get much better pricing, and you’ll get the doctor that you want and maybe you’ll get better than the doctor that you originally thought about,” he added.
History does not support premise
Experts interviewed for this story commended the administration’s move towards transparency, but said that implementing Trump’s executive order – from historical and contemporary standpoints – is likely easier said than done.
“More information is almost always a good thing,” Arthur Caplan, PhD, founding head of medical ethics at New York University School of Medicine, said. “But Trump’s initiative is a return to the 1960s when health care was built around the idea of shopping and the invalid assumption that the free market would drive down costs.”
Nancy Nielsen, MD, PhD, a former senior advisor at CMS during President Obama’s tenure and now senior associate dean for health policy at the University at Buffalo, explained to Healio Primary Care some of the executive order’s potential barriers.
“Transparency is sorely overdue, but it's not as simple and one-size-fits-all as Trump implies. A lot of what patients pay at hospitals is related to their insurance. These prices vary based on who is the insurer and who purchased the insurance plan,” she added.
“There’s a perverse consequence to disclosure that Trump is ignoring,” Memo Diriker, DBA, MBA, founding director of the Business, Economic and Community Outreach Network at Salisbury University in Maryland, added. “Historically, such negotiations usually go in favor of the industry or organization rather than the consumer. Think about how high the salaries of some university presidents and K-12 school superintendents are. These only got that way once those amounts started becoming publicly available.”
Diriker and others also said that there are other reasons why, through no fault of the hospital, the executive order is impractical.
“Are we really going to negotiate our health care the way we negotiate with a paint contractor for our house? If we are having a medical emergency, are we really going to take time to shop for the best deal? Of course not. In most such instances, we rely on a physician’s advice, not a financial planner’s tips,” Diriker noted.
“The idea that individuals will suddenly begin making decisions for health care based on this information is a leap of faith. Most people, particularly those with lower socioeconomic statuses, aren’t able to ‘shop around’ for health care even with this information,” Phil Waters, JD, clinical fellow at the Center for Health Law and Policy Innovation at Harvard Law School, added.
Many of the experts also cited Trump’s lack of specifics regarding implementation as an additional cause for doubt.
“The devil may be in the details,” Diriker said. “There is no one price in play here, and we don’t know yet what prices they are referring to.”
Caplan and Nielsen agreed the executive order falls short on specifics.
“He described an idea, but didn’t even suggest where these prices would be posted: hospital doors? Websites? The executive order does not have the requisite details that are needed,” Caplan said.
“There is a lot that is aspirational here, but there is very little on how it will happen,” Nielsen added.
Pushback anticipated
Other experts discussed the pushback the administration will likely receive as it attempts to bring the executive order to reality.
“I can see hospitals and health plans warning that this could actually increase the
cost of health care, either by adding administrative costs, focusing health care on volume as opposed to quality, or simply because once physicians know what the competition is being paid, their incentive is to match the same prices which may be higher than their own,” Waters told Healio Primary Care.
Nielsen agreed that publicly available prices are more likely to drive costs up than down.
“Price negotiations between health insurance companies and hospitals are closely held secrets. If you make the prices known, the lower-charging hospital is going to revolt and say they want equal pay for the same work,” she said in the interview.
Merck, Amgen and Eli Lilly have already filed suit to block implantation of a previous executive order from Trump that would require pharmaceutical companies to disclose prices in advertising, citing First Amendment protections.
“Price negotiations between health insurance companies and hospitals are closely held secrets. If you make the prices known, the lower-charging hospital is going to revolt and say they want equal pay for the same work,” she said in the interview.
“90% politics; 10% ideology ”
With the 2020 presidential campaign already underway, Diriker suggested Trump may have issued the executive order for political gain, not out of concern for patients.
“His idea will sound great at a rally filled with potential voters,” Diriker said. “But what he will never say, and is important to note, is that though hospitals charge high prices, individual patients will never be able to negotiate the lowest prices.”
Caplan also indicated a potential election-related motive for the executive order.
“This initiative is 90% politics so that he has something positive to say about health care while on the campaign trail,” he said. “The other 10% is Republican ideology. Most Republicans don’t like ‘Medicare for All’ or government-sponsored health care but do like the market-oriented ideas put forth by this executive order.”
Other executive order components
Trump’s executive order also increases patient access to health savings accounts and claims data, requires several agencies to provide details on how the federal government or private sector hamper with health care price and quality transparency, and tasks several agencies with improving data and quality measures reporting systems across government programs. These components are expected to be completed within 180 days of the executive order’s issuance.
Response to the executive order
Some medical groups seemed receptive to at least part of the president’s executive order as they anticipated next steps.
“The American Academy of Family Physicians shares the administration’s goal of improving health care transparency,” Michael Munger, MD, chair of the AAFP board said when asked by Healio Primary Care for his thoughts on Trump’s initiative.
“By informing patients about the quality and costs, we can empower them to navigate the health care system more efficiently. We look forward to seeing and analyzing the forthcoming regulations that will attempt to achieve the proposals outlined in the President’s executive order and to submitting comments to the proposed regulations when they’re published,” he added.
The ACP also appeared encouraged by the president’s initiative, but with a caveat.
“We firmly believe that increasing health care transparency is critical in providing quality, affordable, and accessible health care coverage to patients who need it the most,”
Robert McLean, MD, president, ACP said in a statement. “While ACP supports the concept of the executive order, it should be implemented in a way that does not impose impracticable or excessive administrative burdens.” – by Janel Miller
Disclosures: Caplan is a consultant on expanded access to Janssen, Novartis, Orchard and Boehringer; Diriker reports serving on the board of a regional health system. Nielsen is a board member of FAIR Health, Munger is board chair of the AAFP, McClean is president of ACP,