Starting in January 2021, hospitals will be required to disclose their pricing negotiations to better inform consumers.
The new rule, which mandates that health care systems and insurance companies reveal costs for tests, procedures, and treatments, follows a decision by the U.S. Court of Appeals for the District of Columbia Circuit to uphold President Donald Trump’s executive order calling for health care price transparency.
While the American Hospital Association and others attempted to challenge the 2019 order, claiming it would be expensive, reduce competition, and potentially redirect certain resources, the judges sided with the administration, citing the benefits for consumers and potential for lower costs.
Under the current system, hospitals and insurance companies privately negotiate the pricing for certain procedures and treatments, allowing for an increase in health care prices with little-to-no accountability.
Many of these are the same hospitals who, despite collecting millions from the taxpayer-funded Federal Emergency Management Agency COVID-19 disaster aid, are still sitting on potentially billions of dollars in “cash reserves and investments” just waiting to be used. Studies indicate that 25 percent of this total health care spending is waste in the form of billions of dollars.
Now with more publicly available information, consumers, journalists, and others can make health care providers and insurers answer to rising costs, a move that longtime patient-rights advocate Cynthia Fisher says turns the power of choice over to patients, with the hopes of creating more affordable care.
“The courts have spoken in favor of pro-consumer and pro-competition in health care, and it’s going to be a huge shift because we have not been able to know prices,” Fisher said, noting it is a largely nonpartisan issue. “We’ve been blind, we’ve been blindfolded, and we’ve been blindsided by bills that don’t match our experiences and are many times overcharged.”
“This actually shifts the power between the hospitals and the insurance companies, and all the middle players that have been capitalizing on our American patients’ misfortune,” she continued. “Now for the first time, patients will be in charge of their health decisions and will be able to shop.”
The system revamp designed to create accountability will officially be enforced beginning Jan. 1, 2021, for hospitals and in 2022 for insurers.
Avik Roy, president of the Foundation for Research on Equal Opportunity, said that while patients might not notice any changes at the beginning of implementation, the use of external tools will provide returns in the form of higher paychecks that won’t suffer from high health insurance premiums.
“The real value of this transparency is that it’s going to allow for an explosion of new tools and new analytical approaches to identifying who the lowest-cost, highest-quality providers and one particular health care service are,” Roy said, likening the process to searching Expedia for flights instead of checking every airline website. “All of a sudden, you have a system of accountability where hospitals are not going to be able to get away with high prices in competitive markets,” he added.
These tools, Roy continued “allow you to have the lowest cost health insurance plan that still again makes sure that you’re actually covering people with higher quality services.” According to Roy, even people located in rural areas under the control of regional hospitals will be allowed to explore the pros and cons of leaving the area for cheaper, higher quality care.
While the implementation could take time, Roy said the next 10 years of health care will inevitably change for the better with this executive order and ruling. “This is arguably the most significant health care plan in a generation,” Roy said.