Trump’s Price Transparency Order: Effects on Orthopedics

President Trump ordered the Department of Health and Human Services (HHS) on June 24 to propose a regulation within 60 days requiring hospitals to “publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services.”

If that language seems vague, that’s because it is.

“Prices in the aggregate, prices for individual patients, prices for individual services, prices for geographic areas?” asks the American Hospital Association (AHA) Executive Vice President for Government Regulation and Public Policy, Tom Nickles, quoted in The Washington Post.

The order covers charges by hospitals, both inpatient and outpatient. It does not mention physician practices which are not owned by hospitals. So probably, physician practices would be exempt from disclosure—but you’ll have to wait for the HHS rule to be sure.

It does seem to include most major orthopedic procedures. “Shoppable,” the order said, means “common services offered by multiple providers through the market, which patients can research and compare before making informed choices based on price and quality.”

The order said an unnamed study concluded that “Of the categories of medical cases requiring inpatient care, 73 percent of the 100 highest-spending categories were shoppable. Among the categories of medical cases requiring outpatient care, 90 percent of the 300 highest-spending categories were shoppable.”

Both the AHA and the Federation of American Hospitals (FAH) expressed skepticism that the plan will reduce prices.

“[P]ublicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices,” said AHA President and CEO Rick Pollack. “We look forward to working with the agencies as they develop specific plans with the ultimate goal of helping consumers better navigate their care.”

The FAH said a 2015 study by the Federal trade Commission concluded that publishing negotiated contract rates would help hospitals avoid offering lower rates to insurers.

The executive order also directed the Treasury Department to find ways to expand high-deductible insurance plans.

Surprise Billing: Senate Bill Jumps Ahead of White House

Also, the multi-part executive order made a tentative wave at the current hot-button issue of patients being hit after care with surprise medical bills. It requires HHS to issue within 90 days a request for public comments—not a proposed rule, just a request for comments—on how to inform patients in advance of their likely out-of-pocket costs. The fact that the Administration is proposing only comments suggests that neither the White House nor HHS has figured out how to go about requiring advance statements of likely out-of-pocket costs.

Also, informing is just a halfway step; the other half of addressing surprise billing is creating a mechanism for negotiating the patient’s portion of the bill.

Congress has moved ahead of the White House on that. A widely-discussed proposal for arbitration on surprise bills had early support from the American Association of Orthopaedic Surgeons (AAOS).

AAOS said in late May that it supported an outline of surprise billing legislation proposed in the House, the “Protecting People from Surprise Medical Bills Act.” However, that outline hasn’t been finalized in a bill yet.

However, on June 20, AAOS expressed strong opposition to the “Lower Health Care Costs Act of 2019″ (S.1895), the surprise billing legislation reported out to the full Senate last week by the U.S. Senate Health, Education, Labor and Pensions Committee:

“[W]e strongly believe that imposing an insurer-controlled rate is not the solution. The Lower Health Care Costs Act represents an unprecedented transfer of market power by the government to insurers and directly threatens the independent practice of medicine,” said a statement by AAOS President Kristy L. Weber, M.D.

“Unlike other proposals being presented, insurers would not be required to negotiate with physicians or even consider the individual circumstances of a patient’s care. Instead, they would have the ability to unilaterally lower rates and effectively create a one-size-fits-all ceiling for reimbursement—leading to smaller insurance networks, fewer physicians in rural areas, less competition in the health care industry, and severely reduced access to care across the country.

“A better solution would incentivize all parties to come to a reasonable agreement and allow remaining disputes to be resolved through a fair ‘baseball-style’ arbitration process like the proven New York Model,” Dr. Weber said.