Hospitals to Publicly Disclose Negotiated Rates

By Stacey Kusterbeck, Author, Relias Media

An executive order from the Trump administration issued this week directs the Department of Health and Human Services to require hospitals and insurers to disclose negotiated rates for services and provide patients with out-of-pocket costs before procedures.

“Shoppable services make up a significant share of the healthcare market, which means that increasing transparency among these services will have a broad effect on increasing competition in the healthcare system as a whole,” the order reads.

Regarding negotiated prices with payers, “there is growing public outcry to disclose this information, both from patients and from self-insured employers,” says Ge Bai, PhD, CPA, an associate professor at Johns Hopkins Bloomberg School of Public Health.

The difference between contracted rates and rates charged to uninsured patients is unknown. “Different insurers have different prices and different self-pay patients end up paying different rates at the end of the day,” says Lovisa Gustafsson, an assistant vice president at The Commonwealth Fund.

Once the rates are posted, says Gustafsson, “we can have a discussion about if legislation is needed to put protections in place for patients from exorbitant self-pay bills.”

End to Price Secrecy

Bai says the executive order is “good news for the hospitals that are willing to compete with peers to provide patients with high-quality, low-price care, but bad news for those hospitals that have gotten used to playing the price-gouging game built on price secrecy.”

Disclosure of negotiated prices is expected to make comparison shopping possible. For elective procedures, patients can choose lower-priced hospitals. “Self-insured employers can use this information to choose lower-priced hospitals for selective contracting to save healthcare expenditure,” Bai says.

However, policy experts predict continued confusion for patients. “Outside of the rarest of circumstances, a patient's visit to a hospital, whether for an outpatient or inpatient procedure or other encounter, includes multiple services, what is customarily called an episode of care,” says François de Brantes, MD, MBA, senior vice president of commercial business development at Remedy Partners.

Disclosed prices may be limited to just individual procedures. de Brantes says “hospitals should voluntarily post all-inclusive prices” for common services such as joint replacements.

This could work in patients’ favor, and also the hospital’s favor, says de Brantes: “In an age of greater transparency, the advantage goes to those who disclose the most useful information to support consumer decision-making.”

Price transparency is the focus of an upcoming special issue of Hospital Access Management. The August issue will include information about how hospitals are responding to new price transparency expectations.