The Trump administration on Friday issued controversial rules compelling hospitals and insurers to give consumers more information upfront about what their care will cost — requirements that the president called a historic step to give Americans tools to shop for affordable health care.
Under one rule resisted for months by a broad swath of the health-care industry, hospitals must for the first time reveal in a consumer-friendly format the discounted rates they negotiate privately with insurers for a list of 300 services that patients can schedule in advance, including X-rays and Caesarean sections. The requirement will take effect in January 2021.
In a new twist, the administration is also proposing to require most health plans that Americans get through their jobs to disclose the rates they negotiate with hospitals and doctors in their insurance networks, as well as the amounts they pay to doctors out-of-network.
Taken together, the pair of actions — one a final rule, the other in draft form — is part of President Trump’s 2020 electoral strategy to capitalize on polls that show health care ranks among Americans’ top domestic concerns. Public opinion surveys consistently show that consumers are looking to government especially to ease the burden of escalating out-of-pocket costs.
“This is bigger than health care,” Trump said in remarks from the White House’s Roosevelt Room. “The word is transparency. I love transparency in many ways. It is going to be incredible for consumers, patients, good doctors.”
The hospital industry has vowed for months to sue to try to block the requirements, and the president and senior aides sought preemptively to tarnish such opposition.
“I don’t know if the hospitals are going to like me anymore with this,” Trump said. “That’s okay. That’s okay.”
During a morning briefing, Joe Grogan, director of the White House’s Domestic Policy Council, told reporters: “Make no mistake about it, this rule today will irritate many vested interests in Washington, D.C.”
The two biggest hospital trade groups, the American Hospital Association and the Federation of American Hospitals, confirmed Friday they plan a legal challenge.
The requirement to disclose privately negotiated rates “hurts competition, and we don’t think they have the statutory authority to do it,” said Tom Nickels, the American Hospital Association’s executive vice president for government relations and public policy.
During the news briefing, Health and Human Services Secretary Alex Azar said, “We feel we are on a very sound legal footing.”
Other moves the administration has taken to reshape the U.S. health-care system have been blocked after being challenged in court. Earlier this year, for instance, a Washington-based federal judge ruled the administration did not have the authority to force the drug industry to disclose drug prices in television advertisements
And the administration itself withdrew a major effort to rein in drug prices by prohibiting rebates to insurance middlemen following criticism the changes could increase Medicare premiums before next year’s election.
The issue of transparency in health-care pricing has been a drumbeat for the White House and Trump’s top health advisers for much of this year. In May, administration officials made clear they were developing an executive order on the issue. In late June, the president held a signing ceremony in the White House’s grand foyer to affix his signature to that order.
The executive order directed HHS and two other federal agencies to develop far-reaching regulations, the most controversial part of which is the disclosure of negotiated rates that always have been secret. Friday’s pair of rules flow from that order.
On Friday, Trump mischaracterized aspects of the rules as he talked about them surrounded by Cabinet secretaries, House Republicans and supporters. He said they would allow consumers to “I assume get résumés on doctors, see who you like.” There is no physician-rating component of either regulation.
At one point, he said the hospital-rating rule “is kicking in immediately. It will really get going . . . this coming year.”
The rule originally was proposed to take effect in January but was postponed for a year after industry outcry. It requires disclosure of all standard charges, which include the amount a hospital is willing to accept in cash from patients, as well as the rates negotiated with insurers. All the information must be included in a computerized file organized by diagnostic codes. The 300 services that the administration is classifying as “shoppable” must also be accessible in a format easy for consumers to read.
Nickels said the disclosure requirements are more extensive than the administration proposed this summer. They now compel hospitals to disclose the privately negotiated rate for each service for each insurer, as well as the maximum and minimum rates per insurer.
“They’ve piled on,” he said.
The health insurance industry joined hospitals in denouncing both rules Friday although it did not talk of lawsuits.
Any attempt to improve price transparency should focus on giving patients information about out-of-pocket costs and “encourage — not undermine — competitive negotiations to lower patients’ and consumers’ costs and premiums,” Matt Eyles, president of America’s Health Insurance Plans, a trade group, said in a statement. “Neither of these rules — together or separately — satisfies these principles.”
Scott Serota, president of the Blue Cross Blue Shield Association, said in a statement that publishing negotiated rates for services “may have negative, unintended consequences — including price increases — as clinicians and medical facilities could see in the negotiated payments a road map to bidding up prices.”
During the news briefing, Azar called such predictions “a canard.”
He said the administration did not estimate the potential savings from requiring rate disclosures because “we’ve never experienced this level of transparency before.” But he gave an anecdotal example, saying MRI prices decreased by about 20 percent in New Hampshire after more public information about their costs was provided.
Seema Verma, administrator of HHS’s Centers for Medicare and Medicaid Services, minimized the cost of the requirements to hospitals. “It’s a very tiny percentage of their overall revenue, less than 1 percent,” she said in response to a question.
Nickels called the estimate “ludicrous. It certainly will cost more.”