The Trump administration is sounding out the medical industry on requiring hospitals, doctors and other health care providers to publicly disclose the secretly negotiated prices they charge insurance companies for services, a move that would expose for the first time the actual cost of care.
The U.S. Department of Health and Human Services is seeking public comment on whether patients have a right to see the discounted prices in advance of obtaining care, federal officials said. The invitation for comment—outlined in a little noticed passage of a broader patient-data proposal released last month—is a major step toward a possible rule that could require providers to release such information, they said.
Mandating public disclosure of the rates would upend industry control of price negotiations, and put more decision-making power in the hands of patients. Hospitals and insurers typically treat specific prices for medical services as closely held secrets, with contracts between the insurers and hospital systems generally bound by confidentiality agreements.
Commercial health-care markets are rife with complex systems of hidden charges and secret discounts—all stemming from a lack of transparency over what hospitals charge for services. Policymakers, employers and patients are often unable to clearly see which hospital systems and doctor practices are driving high costs.
The administration’s vision, which would possibly include fines for noncompliance, is to arm patients with the information needed to make health care decisions much like shopping for other consumer services. Rates potentially could be posted on public websites, where consumers would check the negotiated price of a service before they pick a provider and undergo treatment. That, in turn, could lead to lower copays or deductibles.
“It’s an effort by the president to help put Americans back in control of price data,” said Don Rucker, national coordinator for health information technology at the Department of Health and Human Services.
“We’ve had extensive discussions with the White House on this,” Dr. Rucker said. “Our interest is on how can we empower the American public to shop for their care and control it.”
Industry officials say the Trump administration faces many hurdles before implementing such price transparency, which is likely to be met by fierce opposition including possible legal challenges from hospitals and insurers. These industries have much to lose if the current system shifts to one in which all transactions are subject to the Trump administration’s push for transparency.
If doctors’ negotiated rates become public, out-of-network doctors could lower their prices and lure away consumers. And insurers that have higher negotiated rates than a competitor could demand a hospital also give them the same discounted rate.
A group that advocates for patients praised the administration’s move.
“If this rule goes forward, it will be a huge step towards true pricing transparency and will finally allow patients to really see what their costs will be before a service—something that has rarely been possible before,” said Caitlin Donovan, director of outreach and public affairs at the National Patient Advocate Foundation, which advocates for quality health care for people with chronic, debilitating or life-threatening illnesses.
The request for public comment has been largely overlooked because it was tucked into a 700-page draft regulation released last month on improving patients’ access to their electronic health records. Many insurers and hospital groups declined to discuss the government’s request for comment, saying they were unaware of it or were still studying the idea.
Officials could move to issue a final rule mandating the disclosure of negotiated rates after the comment period closes May 3.
The move follows a report on health-care markets issued last December by the Trump administration, which called for greater pricing transparency and cited reporting in The Wall Street Journal on health costs, among other sources.
Regulators said the authority for requiring price disclosure stems from the 21st Century Cures Act enacted in 2016, which makes blocking of health information illegal under penalty of up to $1 million, and regulations under federal privacy law.
The prices charged for health care vary widely depending on whether a provider is in or out of the patient’s insurance network the insurer’s undisclosed price agreements with hospitals.
Hospitals have “chargemaster” rates—the hospital equivalent of a retail price for services—but insurers negotiate steep discounts to them, and those discounts are kept from public view.
Employers and patients are often unable to see which hospital systems and doctor’s offices are driving costs higher. Some health-care economists argue that the secrecy is a factor in why the U.S. spends more per resident on health care than any other developed nation.
Fully forcing the rates into the open could change the dynamics of those markets. Insurers might demand the same hospital discounts won by competitors, while some hospital systems might push for rates that match their crosstown rivals’. Employers and patients, given clearer comparisons, might change their habits—though consumers often show limited inclination to shop for health-care services, even when they face significant costs under high-deductible health plans.
“You can’t shop for care if you don’t know what the prices are,” said HHS’s Mr. Rucker.
Once publicly available, patients may have the benefit of third-party technology companies aggregating the price data and building shopping tools that show the negotiated costs for services charged by various hospitals and providers.
Out-of-network doctors could try to compete with in-network negotiated rates. Health systems that charge higher negotiated rates could lose business if they don’t match competitors’ rates or justify the reasons for their steeper costs. Employers could press their insurers to include hospitals with lower negotiated rates in their networks.
Some hospital groups and insurers said mandating disclosure of negotiated rates could violate antitrust or contract law and that negotiated rates are proprietary. Others said a rule is unnecessary because they already publicly release price data, albeit that information doesn’t include the discounts offered insurers.
Hospitals are also likely to push for insurers to be under the same transparency rules as hospitals and be required to release the negotiated discounts they pay for patient care.
“They’d need to bring insurers and payers into the equation because they have the data to determine for patients what their costs should be,” said Chip Kahn, president of the Federation of American Hospitals, which represents investor-owned community hospitals and health systems.