Why Are Hospitals So Irritated with President Trump’s Executive Order on Healthcare Price Transparency?

It's easy to sign Executive Orders and Make Proclamations when you won't have to implement them in the real world of U.S. healthcare...

New rules mandating industry price transparency have given rise to skepticism by industry experts because there’s no guarantee the herculean efforts will meaningfully lower prices for patients in the remaining time Trump has as President.

President Donald Trump’s recently signed Executive Order  directed HHS and other federal departments to begin rulemaking to require hospitals and payers to release information based on their privately negotiated rates. Providers would also have to give patients estimates of their out-of-pocket costs before a procedure.  This has come about at a time experts view as too little – too late. First mover hospitals and ASCs are already gearing up for price transparency and bundled price quotes for surgical and diagnostic procedures and other treatments with a set price that includes all or most services under a finite episode of care.  For those hospitals and ASCs, the Trump Executive Order is a step backwards and isn’t as practical, progressive or protective for patients as the White House propaganda would lead people to believe.

Patients aren’t sure whom to trust and where to look for price transparency or pricing information that’s already available. They are also uneasy about challenging a recommendation by their doctor to undergo a certain procedure or test, and to get it done at a certain facility. 

Often, brand loyalty to their surgeon and their local hometown hospital or ASC may not be overcome with just a difference in price.  According to our go-to-expert on medical travel consumer behavior, Dr Maria Todd of AskMariaTodd™, she says that this local brand loyalty is a key reason why “medical tourism” isn’t thriving as much as the U.S. medical tourism trade association propaganda would lead one to believe — especially when it comes to luring patients from the USA to foreign countries. 

The U.S. healthcare delivery system has so many moving parts and unique elements that lead to confusion about medical bills and value comparisons work. 

Todd adds, “When one is unwell or preoccupied with health stress, that’s not the time to begin comparing prices and options. People usually tend to seek the simplest solution even if it will cost a little more or require a short flight or a few hour’s drive. That’s human nature; not just in the USA but everywhere. Medical “tourism” (the idea of pairing travel for healthcare with sightseeing) is often the furthest thing from their mind. If the care they need is unavailable locally (e.g. rural areas, specialist scarcity, etc.) then they want the easiest, simplest, least confusing, trustworthy supplier to help them. If they can pick from a provider located a few hours from home to the north, south, east or west, then they’ll be more apt to consider price arbitrage and transparency – but otherwise, they’ll pay a little more just to put that decision behind them and refocus back on getting better or eliminating pain. and if their employer will pick up 100% of the costs if they use a particular U.S. provider, they may agree to travel to avoid all out-of-pocket expense for an elective, scheduled surgery or diagnostic procedure.”

Todd also says that if we want to see how U.S. consumers select and purchase health services, all we need to do is observe and analyze consumer behavior in the emergency department or urgent care setting. Do they ask the price before you inject them with the pain medication when they are passing a kidney stone or during a heart attack or an orthopedic injury or start to suture a bleeding facial laceration? And once the treatment has begun, it is highly unlikely that they will switch providers during that episode of care unless the provider is (a) rude or abusive or condescending, (b) out of network, or (c) wasn’t in their hometown to begin with (as in cases where they are on vacation or a business trip with stricken with the injury or illness. 

Providers are upset that even if they expend human and technology resources and website real estate to comply with the Executive Order, very little will come of all that investment in terms of ROI or patient usefulness.

What the President’s Order aims to achieve

The executive order has two main directives:

  1. Within 60 days, HHS must 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.”   “That’s a lot of wordy mumbo jumbo that places the responsibility on government agencies that are understaffed and out-of-touch with the realities faced in real time, real world situations where the rubber meets the road on hospital price transparency,” says Todd. “Not to mention all the complexity around unraveling confidentiality provisions of managed care rate and participation agreements.”
  2. Within 90 days, HHS and the Departments of Labor and Treasury must solicit comment 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 or services to patients before they receive care.”  Todd explains that soliciting comment on a proposal is not the same as implementing a solution that is both sustainable and practical. And the hospitals are even more upset that in the unlikely event Mr Trump is re-elected, any work towards bring this Executive Order to a meaningful state will likely be scuttled by a new administration and replaced later with something that makes price transparency information meaningful, relevant, and reliable and mitigates surprises.

The order also requests the Secretary of the Treasury expand coverage options for high-deductible health plans and health savings accounts. All those efforts, requests and actions might also be tossed out of the window by a new administration. Nobody wants to do all this work without some indication that it will be valuable and sustainable. 

Too much finger pointing by a President who uses Twitter to blame and ridicule others

The order itself wastes no time in pointing the finger at industry players for current patient frustrations with the system. “Opaque pricing structures may benefit powerful special interest groups, such as large hospital systems and insurance companies, but they generally leave patients and taxpayers worse off than would a more transparent system,” according to the document.

Todd explains that making rates public doesn’t do more than treat healthcare as a commodity service. That infers that all brands, providers and treatments are interchangeable. “Tell that to Cleveland Clinic, Mayo Clinic, Johns Hopkins and others. They worked long and hard and made tremendous investments into their brands of healthcare. They charge more and they get more and people are “proud” to pay their prices. And they are proud to brag on that fact. We hear it in the medical tourism world too,” Todd explains. “People from wealthy oil-rich nations brag and demand that their governments pay upwards of $240,000 or more for a trip to one of these high brand healthcare outlets when they need a procedure that is available in their country at a lower price. Whenever possible, they want to travel to the USA, not India, Iran, or Turkey or even Singapore or Malaysia or Thailand.”

According to Todd, “Medical literacy improvement should have been Trump’s focus. Raw health price data offers the average patient almost nothing of value in terms of information and the ability to analyze and understand the information. And it makes no sense if you don’t know if you truly need the service to begin with. Trump would have been far more effective if he’d focus on social determinants of health and improving health and wellness literacy. Without that, price transparency data isn’t actionable.”

So far, SurgeryShopper.com is one of very few resources on the internet that renders “easy-to-understand” data that “meaningfully informs patients and allows patients to compare prices” across healthcare providers across the nation. Even then, many would-be competitors only make their prices and providers available to employers willing to pay a per-employee-per-month “network investment recovery fee”. The brokered information is unavailable to individual consumers as it is on SurgeryShopper.com. In fact, individual consumers are not even welcome to inquire on most websites unless their employer paid the network investment recover fee each month.

Todd also points out that Ohio passed a price transparency law in 2015 that required providers give patients information on out-of-pocket costs before a procedure but it has still yet to clear the court battles and be implemented. California and other states have them, so what made Mr Trump’s executive order so special? 

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