The Coming Battles Over Disclosing Real Health Costs

The Trump Administration last week issued sweeping price disclosure rules that would require health providers and insurers to tell consumers the real prices of care, permitting them to comparison shop for the best deal and understand what their out-of-pocket costs would be.

The disclosure requirements would take several years to implement, are strongly opposed by health providers, and might not survive intact in either a Biden White House or even a second term for President Trump.

Nonetheless, they represent an inescapable consequence of how enormous amounts of digitized health information are being used to transform health care. One of the major themes of my forthcoming health care book is that such “big data” is already triggering significant health reforms.

Led by big, self-insured health plans, employers have built tools that identify health care providers producing the best care for the lowest prices. The lack of such price transparency has meant, for example, that there is no relationship between the quality of care and its price. Doctors who charge the most money for their services may, in fact, provide the worst care, but consumers have had no way of telling or making informed decisions.

Using millions of paid health insurance claims, employers and tech-driver entrepreneurs can now identify caregivers with the best health outcomes and, within this group, which ones charge the least money.

Even this single achievement can produce staggering changes. For example, Walmart and other savvy employers can now fund top-notch care for employees and save so much money they can afford to a pay employees a wellness bonus to take better care of themselves.

At the same time, such number-crunching is exposing huge price inefficiencies in U.S. health care, which costs twice as much per capita as in any other advanced society. This knowledge has, in turn, attracted thousands of venture capitalists into health care, where they often are disrupting long-established and often anti-competitive business patterns within the fraternities of big pharma, hospitals, equipment companies, and insurers.

The government’s price transparency rules would require health insurers to provide consumers with “personalized out-of-pocket cost information, and the underlying negotiated rates, for all covered health care items and services, including prescription drugs, through an internet-based self-service tool and in paper form upon request.” An initial list of 500 “shoppable” health services would be required in two years and all remaining items in three.

In only a year – lightning speed for health care – insurers would be required to provide three data files that would be provided to consumers: 1) negotiated rates for all covered services provided by a health plan’s in-network providers; 2) historical payments and billed charges from non-network providers, and, 3) in-network rates and prices for all covered drugs at a consumer’s local pharmacy.

Previous transparency rules would require comparable transparency from hospitals. They have sued but the hospitals’ case was not favorably greeted in an earlier court hearing.