On June 24, 2019, President Trump signed an executive order (EO) intended to improve health care price and quality transparency, boost tax-preferred health savings accounts, and protect patients from surprise medical bills.  This is not the first time the Trump Administration has tacked health price disclosure.  For instance, new hospital price transparency rules went into effect October 1, 2019, and the Administration has issued rules (challenged in court) to require drug manufacturers to include certain pricing information in direct-to-consumer television advertising.  This attempt is more ambitious, however.  In signing the measure, the President remarked that if the Administration’s action “is half as big as some people are saying it will be, it will be one of the biggest things ever done in this world, in this industry, in this profession.”  That said, assessing the potential impact of this EO is a challenge given that (1) the EO is short on actual policy changes, deferring action to future regulations and reports, and (2) the realities of the health marketplace prevent “transparency” from being a panacea.

The EO sets in motion three parallel initiatives to provide patients with more health care pricing information, each of which will require additional policy development:

  • The EO directs the Secretary of Health and Human Services (HHS) to propose regulations to require hospitals to publicly post standard charge information, including charges based on negotiated rates and for common or “shoppable” items and services (defined as “common services offered by multiple providers … which patients can research and compare before making informed choices based on price and quality”).  The charge information, which will cover services, supplies, or other fees billed by the hospital or provided by hospital employees, must be provided “in an easy-to-understand, consumer-friendly, and machine-readable format … that will meaningfully inform patients’ decision making and allow patients to compare prices across hospitals,” and must be regularly updated.  The regulation must be issued within 60 days of the order; there is no deadline for the Secretary to issue a final rule or for the regulation to go into effect.
  • The EO requires the Secretaries of HHS, Treasury, and Labor to issue an advance notice of proposed rulemaking (ANPR) “on a proposal to require healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care.” The ANPR must be proposed within 90 days; no other deadlines are established.
  • The EO instructs the HHS Secretary, in consultation with the Attorney General and the Federal Trade Commission (FTC), to “issue a report describing the manners in which the Federal Government or the private sector are impeding healthcare price and quality transparency for patients, and providing recommendations for eliminating these impediments in a way that promotes competition.” Furthermore, this report – which must be issued within 180 days – “should describe why, under current conditions, lower-cost providers generally avoid healthcare advertising.”

In other provisions, the EO seeks to:  align quality measures across federal health programs and eliminate low-value or counterproductive measures; expand researcher and other stakeholder access to de-identified claims data; and expand access to tax-preferred health savings accounts and make other tax-related policy changes (potentially including direct primary care arrangements and healthcare sharing ministries).  Finally, the EO requires the HHS Secretary to submit a report on ways to address surprise medical billing; the report is due within 180 days.

The full impact of the EO will not be felt unless associated regulatory policies are promulgated and enacted.  Industry players are already warning, however, that price transparency does not necessarily equate with lower out-of-pocket costs.  For instance, the American Hospital Association contends that “publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”  Even the FTC has observed that if disclosures allow competitors to figure out what their rivals are charging, it “dampens each competitor’s incentive to offer a low price, or increases the likelihood that they can coordinate on higher prices.”  Furthermore, while the EO targets “shoppable” health care (which the Administration states makes up a significant share of the market), many health care decisions would not necessarily be different in light of additional pricing data, given patients’ established provider relationships, insurance network rules, and numerous other factors.

We will be reporting on the progress of the Administration’s transparency initiative as future policy milestones are achieved.