by Jordan Roberts
Director of Government Affairs, John Locke Foundation
Last week the Trump administration announced it would begin forcing hospitals to publically disclose the rates in which they negotiate with insurers. I wrote about this on the blog back when the administration was mulling the idea. Now we have the final rule.
This rule piggybacks off of an earlier transparency rule where the administration required that hospital publically simply their list prices for a service or item. The new rule goes further to include negotiated rates with insurers. An article from Health Affairs explains further:
Hospitals will now have to disclose their list of standard charges for all items and services online in a single, machine-readable digital file. As noted, these standard charges must include each of the data elements outlined above for each item and service (i.e., the gross and payer-specific charges for each item and service, along with minimum and maximum negotiated charges). Hospitals must also disclose the associated billing codes for each item or service, including, for example, (Current Procedure Terminology) CPT codes, Healthcare Common Procedure Coding System (HCPCS) codes, diagnostic-related Groups (DRGs), or others.
“Payer specific charges” mean the negotiated rate that each payer agrees to pay for the completed service. This is a big deal because it is a widespread occurrence that prices vary widely by payer, hospital, city, region, and state. Often insurer A and insurer B pay different rates for the same service at the same hospital just based on negotiations between hospital and insurer.
The lack of price transparency is just one of the main criticisms of the health care system. I believe its a significant catalyst for such a dysfunctional health care system. It’s almost impossible to find an industry like health care where almost everyone involved has no idea what is the true cost of the service provided.
Skepticism remains about how effective this final rule will be in bringing down prices. However, as consumers become more aware of health care prices, they will become better consumers of health care.