The Trump administration issued an executive order in February to outline steps federal agencies should take to further enforce health care price transparency rules. During his first term President Trump created rules that required hospitals and health plans to post prices in both consumer-friendly format and machine-readable format for researchers and content creators for decision-support tools and apps. Hospitals were supposed to post prices by January 2021, with health plans following 18 months later. Hospitals sued to block the transparency rules but were unsuccessful. The most recent executive order does the following, according to Health Affairs:
- Require that “actual prices of items and services, not estimates” are posted;
- Issue guidance or proposed rules to ensure price data are “standardized and easily comparable across hospitals and health plans;” and
- Issue guidance or proposed rules to increase enforcement and improve compliance with the rules.
Background: Enforcement of the transparency rules during the Biden Administration was off to a slow start, making real transparency is a significant problem. The price data posted by hospitals is still not usable. There are no decision-support tools where I can compare prices for an MRI in Dallas, for example, to find the cheapest price. This from Health Affairs:
Although hospitals and health plans have posted a massive amount of health care price data, actionable information on prices is still not readily and widely available, partly due to ongoing issues with the usability and quality of the data. The executive order sets up the next steps in an iterative process to improve the usability of health care price data and compliance among hospitals and health plans.
Both data quality and hospital compliance remain ongoing issues. A 2024 Government Accountability report found that hospital data quality issues have prevented large-scale, systematic use of the data, though analysts anticipated some improvements in light of new CMS requirements for more standardized reporting formats and additional data elements phased in on July 1, 2024, and January 1, 2025. Furthermore, based on a data audit of a sample of hospitals, the Department of Health and Human Services Office of Inspector General estimated that 46 percent of hospitals were not fully compliant with requirements for MRFs, consumer-friendly shoppable service displays, or both. [note: MRF stands for machine readable format]
Health plan compliance has also been slow. Problems with data have made it almost impossible to use. It is even more logical that my health plan could help me find the cheapest vendors they reimburse. However, they do not.
Unwieldy MRFs are inflated by redundant and irrelevant data, including implausible “ghost rates” for providers who do not perform a specific health care service (e.g. the rate for a cardiology code billed by a podiatrist, or vice versa). A range of other well-documented data issues make it challenging to analyze the data, make comparisons, and draw meaningful conclusions.
It makes you wonder if data corruption is not a strategy to prevent transparency. Something that I have not seen talked about is how the capture of doctors by hospitals will affect price transparency. Three-fourths of physicians work for hospitals or large group practices owned by private equity investors. An independent doctor may recommend an MRI and he or she would not care where I get it done. I may even be able to get a recommendation where there is a good price with good quality. However, if my doctor is employed by a hospital, I would be directed to his or her employer’s facility. What good is information on prices if my doctor is under orders to steer me to a specific provider’s facilities where prices are high? These conditions also need addressed. Furthermore, if a physician order is required to obtain many services, should physicians be allowed to steer patients to expensive services?
Price transparency is a necessary condition for competition to thrive. However, it is not the only requirement. Price transparency is the natural response when firms compete for consumers on the basis of price, quality, and other amenities. Firms competing for consumers do not have to be required to disclose prices, they lose business when they fail to reveal prices. The U.S. healthcare system is not competitive, however. Thus, firms either believe price transparency is of no use to them, or they realize it actively reduces profits.
Once patients begin to realize they can save money by actively comparison shopping, providers will have an incentive to compete for patients’ business. Merely mandating price transparency will not get us to competition without additional steps required to allow competition to flourish.
Read more at Health Affairs: New Executive Order Outlines Next Steps For Health Care Price Transparency
Thanks for exploring an important but difficult area.
I am in a Medicare Advantage plan. If I need an MRI, I am sent to a lab that is covered by my plan. The cost to me is $50 no matter who does the MRI.
The person who is under age 65 and uninsured lives in a completely different world, of course. I wonder if this is a large enough segment to change the health care system.