The Trump administration on Friday said it would begin forcing hospitals to publicly disclose the discounted prices they negotiate with insurance companies, aiming to help people shop for better deals on a range of medical services, from hip replacements to brain scans.
The federal rule, part of a broader push to make health care markets more transparent to patients, would not take effect until 2021, however. The administration also unveiled a proposed rule to require insurers to allow patients to get advanced estimates of their out-of-pocket costs before they see a doctor or go to the hospital.
The hospital industry, which has long kept these rates secret, will almost certainly challenge the rule in court.
President Donald Trump was expected to hold a briefing Friday afternoon to discuss the new rules, which the administration hopes will make the health care markets work better by making information about prices more accessible to patients.
The new rule requires hospitals to make a range of prices easily available. Those costs include negotiated prices when they are part of an insurer’s network, what they are paid if the care is out-of-network and even what the hospital would accept for the treatment if paid in cash.
“American patients have been at the mercy of a shadowy system,” said Alex M. Azar II, the secretary of health and human services, said in a news conference Friday. “This shadowy system has to change.”
“Today’s transparency announcement may be a more significant change to American health care markets than any other single thing we’ve done,” Azar said in a statement.
Administration officials, employers and others have criticized hospitals and insurers for keeping the deals they strike a secret, making it challenging for patients to seek less expensive places to get care. They argue that by making it easier for people to find the actual prices that insurers pay — and not just the standard list prices for various services, which the Trump administration started requiring hospitals to post earlier this year — hospitals will be under more pressure to compete on prices.
The proposal, if implemented, has the potential to roil the health care industry, which critics argue use the secrecy of their negotiations to keep prices high. A recent study showed some hospitals are paid two to three times by private insurers what the federal Medicare program pays for the same care. Even employers say they have little visibility into the prices being paid by the insurers on behalf of their workers.
Both the hospitals and health insurers say they should not be required to make public what they consider proprietary information, and they are expected to mount legal challenges to any mandated disclosure. In Ohio, a state law requiring price transparency that was passed two years ago is still stuck in the courts.
Both the hospitals and insurers argue that disclosing prices would lead to higher costs, not lower ones, because each institution would know the prices of its competitors and could be reluctant to settle for less.
“This is a canard,” Azar responded, adding that he believed the lack of transparency in the market has clearly led to higher prices.
If the rule is challenged, it is not clear how successful the administration will be in making its case. Another attempt to create transparency — a requirement that pharmaceutical companies disclose the list price of their drugs in their television ads — has been put on hold by the courts. A federal judge ruled last summer that the Department of Health and Human Services exceeded its regulatory authority with the rule, which was seen as largely symbolic since list prices are not what patients typically pay.
“We may face litigation, and we feel we are on a very firm legal footing,” said Azar, who emphasized the information is already being made public to patients on what is called an explanation of benefits form — but after they go to the doctor or get a medical treatment.