The order, "Improving Price and Quality Transparency in Healthcare", does not immediately make changes to America's health care system, but creates rules that will require hospitals to disclose the prices patients and insurers actually pay and require the Department of Health and Human Services to put forward a proposal to provide patients with information about potential out-of-pocket costs they will face before they receive services. They also said consumers making healthcare decisions not only based on price, but also on quality, recommendations from their doctors and available time of specialized services.
Making negotiated rates public could pressure pricier hospitals to justify charging more than lower-priced competitors, said Chas Roades, co-founder and chief executive officer of consultancy Gist Healthcare Inc.
"This lack of price transparency has enriched industry giants greatly, costing Americans hundreds of billions of dollars a year".
"This is bigger than anything we've done in this particular realm", he said.
Existing tools that give patients price information are poorly used, Garthwaite added. For example, if a hospital charges an insurer $3,500 for a type of echocardiogram and the same test costs $550 in a doctor's office, a patient might go for the lower-price procedure to save on copays.
He said the action should cause healthcare-related prices to decrease as transparency increases.
The executive order has not been fully released and the details of the plan are not finalized, but the president has suggested that HHS should develop a process for controlling health care costs by establishing a new set of rules for regulation. A senior administration official said that whether patients would have access to a full database of specific prices or something closer to a range of prices would be decided during the regulatory process. That will involve a complex give-and-take with hospitals and others industries affected.
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Lawmakers have also taken up the issue. Sen. Bernie Sanders (I-Vt.) and his push for a "socialist takeover of health care". The executive order simply requires that an estimate of that information be required in advance, before services are rendered, the senior administration official said. 'Some people say bigger than health care itself'.
Hospital care cost Americans about $1.1 trillion in 2017, accounting for one-third of all USA medical spending.
Tom Nickels, the American Hospital Association's executive vice president for government relations and public policy, said the order's language "is pretty vague" about publicizing negotiated rates.
Azar pushed back on that argument by pointing to fact that negotiated rates are disclosed in the explanation of benefits document provided to patients after a hospital visit.
"Every time one of us goes to a hospital, within a couple of weeks, there arrives an explanation of benefits that contains the list price, the negotiated price, and your out-of-pocket cost", Azar explained. "This is not some great state secret out there".
In addition to consumers being unable to get price information upfront in many cases, hospital list prices and negotiated discount rates vary widely by hospital and insurer, even within the sameregion. In addition, the order directs HHS to collaborate with other departments to curb a hospital billing problem that also has gained attention in Congress: patients saddled with unexpectedly large medical costs because they did not realize some doctors who treated them were out of their insurance network.
Trump also signed legislation that would end "gag" clauses that had blocked pharmacists from informing patients about possible lower prices for drugs.