Proposed Rule Targets Pricing Transparency in Healthcare

The Trump administration and CMS have increased scrutiny on the healthcare industry’s lack of pricing transparency with a proposed rule set to take effect January 1, 2020. If left unchanged, the rule will force hospitals to post their standard prices and contractually agreed fees for select services. The stated rationale is to provide patients a “shoppable” healthcare experience. If the rule does indeed pass, it may mark the beginning of a legal push to try and generate price competition where none currently exists. Due to the unique nature of healthcare finance through third parties, very few sectors of the industry discuss costs with patients directly.

Both the American Hospital Association and America’s Health Insurance Plans are vehemently opposing the proposed rule, reflecting the reality that change in healthcare generally does not happen without strong opposition from industry stakeholders. Both groups argue such a change will limit patient access to care by creating a price “floor” rather than “ceiling.” They cite privacy concerns as well since insurance-hospital contracts and fees are generally confidential.

Regardless of the outcome of the proposed rule, this episode reflects the reality that the lack of transparency in healthcare has become a target and change will likely happen at some point. This is part of a broader goal by the government and the insurance industry to find new incentives for healthcare providers to drive their costs down. Doctors in private practice as well as smaller healthcare facilities should watch the evolution of these changes to see if and when transparency directives will trickle down to them.