By Ken Perez, vice president of healthcare policy, Omnicell, Inc.
On June 24, President Donald Trump issued an almost 1,600-word executive order (EO), “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.”
The EO’s overall purpose is “… to enhance the ability of patients to choose the healthcare that is best for them” by providing them with access to useful price and quality information, which enables them to find and choose low-cost, high-quality care.
This EO aligns with previous pronouncements by the Trump administration, including Executive Order 13813 of October 12, 2017, (Promoting Healthcare Choice and Competition Across the United States) and Centers for Medicare and Medicaid Services Administrator Seema Verma’s promise, announced at HIMSS18, “to put patients at the center of the healthcare delivery system and empower them with the data they need to make the best decisions for themselves and their families.”
Central to this latest EO is the assumption that valid price comparisons can be made for “shoppable” services, defined as common services offered by multiple providers through the market, which patients can research and compare before making informed choices based on price and quality.
Shoppable services are significant. Per a study cited by the Council of Economic Advisers in its 2019 Annual Report, of the categories of medical cases requiring inpatient care, 73 percent of the 100 highest-spending categories were shoppable, and among the categories of medical cases requiring outpatient care, 90 percent of the 300 highest-spending categories were shoppable.
In addition, improved price transparency could help protect patients from surprise billing, which occurs when patients receive unexpected bills at highly inflated prices from out-of-network providers they had no opportunity to select in advance. Other benefits of improved transparency included competition, innovation, and value in the healthcare system.
The EO specifies that within 60 days of the date of this order, the U.S. Department of Health and Human Services (HHS) shall propose a regulation to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in an easy-to-understand, consumer-friendly, and machine-readable format using consensus-based data standards that will meaningfully inform patients’ decision making and allow patients to compare prices across hospitals. Posting of standard charge information will apply to all services, supplies, or fees billed by the hospital, and hospitals will be required to regularly update the posted information. HHS will establish a monitoring mechanism to ensure compliance.
The EO also specifies that within 90 days, there will be rulemaking (by HHS, the Department of the Treasury, and the Department of Labor) on a proposal to require healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items.
In addition, the EO specifies that within 180 days, HHS shall issue a report describing how the federal government or the private sector are impeding healthcare price and quality transparency for patients, and providing recommendations for eliminating these impediments in a way that promotes competition.
The EO also included mandates regarding the establishment of a Health Quality Roadmap and standardization of quality measures, as well as HHS providing the private sector with increased access to de-identified claims data from taxpayer-funded healthcare programs.
The Trump administration is choosing a consumer-driven approach to try to reduce healthcare costs. As former Rep. Ernest Istook (R-Okla.), president of Americans for Less Regulation, said, “Everything is based upon the theory that consumers would wade through the data to decide whether to seek care from different hospitals or doctors and would pay less.”
Because of its breadth—spanning pricing and out-of-pocket costs for all services, supplies and fees—in striking contrast to the Trump administration’s previous railing against the burden imposed on the healthcare industry by the prior administration and the Affordable Care Act, this EO would also impose a heavy regulatory burden on hospitals, physicians, and health insurance companies. Not surprisingly, the price and quality transparency provisions are opposed by the American Hospital Association (AHA), the Federation of American Hospitals (FAH), and America’s Health Insurance Plans (AHIP). The provisions could prove to benefit companies such as Castlight Health, ClearCost Health, and Healthcare Bluebook that aggregate and present price and quality information for use by the public and employers.
Because of this opposition by nonprofit and for-profit hospitals, as well as health plans, the rulemaking processes for the price and quality transparency initiatives will surely be contentious and potentially lengthy, possibly resulting in a narrowing of the breadth of services subject to the transparency requirements, rollout across multiple stages, an extended phase-in period, etc. Conceivably, the hospital and health plan groups could ask for offsetting relief from other regulatory requirements.
To that end, the Health Quality Roadmap and standardization of quality measures would be well received by the healthcare industry, and the increasing access to data could be a boon to healthcare providers, healthcare IT vendors, healthcare consulting firms, and health plans—especially in support of improved population health management, given the vast amounts of Medicare and Medicaid claims data.