New Policy Takes Aim at “Secret” Hospital and Insurer Negotiations

In a proposed rule, the U.S. Department of Health and Human Services (HHS) announced it is considering requiring U.S. hospitals and insurers to publicize their price negotiations for services – discussions that typically happen behind closed doors.

The proposal is intended to increase competition and lower costs by letting consumers “shop around” based on price variations. According to a Health Affairs review, rising prices for hospital care are a major driver of health-care inflation, as they are filtered down to patients through increased insurance premiums. Disclosing prices, HHS argues, would pressure insurers to negotiate better prices for their customers.

However, health economists doubt that transparency efforts will greatly affect how much patients pay for the care they receive. For example, patients cannot easily switch between organizations and providers if they find a less-expensive alternative.

The policy also was met with skepticism from associations representing hospitals and health-care systems and insurers.

“[Making negotiated prices public] isn’t really what consumers need or want,” Tom Nickels, the American Hospital Association’s executive vice president for government affairs, told NPR’s “All Things Considered.” “What consumers need and want is ‘What are their out-of-pocket costs?’ ”

Revealing the secretly negotiated deals to increase competition could have the opposite effect, he added. “We have a system that basically allows people to have private contracts between each other in an economy.”

This proposed policy is the latest in an effort to increase pricing transparency and create more informed patient-consumers. Recently, the administration mandated hospitals to publicly disclose list prices of all its services and required pharmaceutical companies to include prices in their direct-to-consumer advertising.

The proposed rule is open for public comment through May 3, 2019.

Source: The Wall Street Journal, March 7, 2019; NPR, March 11, 2019.