The Promise and Peril of Price Transparency Under Trump’s New Executive Order - The Legend of Hanuman

The Promise and Peril of Price Transparency Under Trump’s New Executive Order


The bewilderingly opaque nature of healthcare prices is making headlines again after President Donald Trump’s latest executive order, which aims to strengthen enforcement for the Centers for Medicare & Medicaid Services’ price transparency requirements.

Having read the order, some healthcare executives argued that increased price transparency could reduce healthcare costs by fostering greater competition, while others expressed concern about the possible effects on hospital-payer negotiations, as well as the practicality of enforcing these requirements.

The real question remains: Will price transparency regulations ultimately empower consumers, or will it add layers of complexity to an already opaque system?

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What’s the aim of the executive order?

The executive order, issued on Tuesday, directs the Departments of the Treasury, Labor, and Health and Human Services to “rapidly implement and enforce” the price transparency regulations that Trump introduced near the end of his first term.

Back in 2019, Trump signed an executive order aimed at boosting price transparency. CMS began enforcing price transparency requirements for hospitals on the first day of 2021.

The law requires hospitals to post their gross charges, payer-specific negotiated charges, de-identified minimum negotiated charges, de-identified maximum negotiated charges and cash prices on their websites in a machine-readable file. It also mandates that hospitals must publish pricing for the 300 most commonly-used services to their website in a consumer-friendly manner.

In July of 2022, CMS began requiring payers to post price transparency data as well. 

The journey to compliance has not been a smooth one. Data from November showed that only 21% of the nation’s hospitals were in full compliance with federal price transparency regulations. However, CMS has fined just 18 hospitals for alleged noncompliance.

The White House fact sheet published along with Tuesday’s executive order charged that price transparency regulations were “slow-walked” by the Biden-Harris administration — an apparent reference to the low number of monetary penalties issued to noncompliant providers.

One proponent for increased price transparency regulation — Cynthia Fisher, founder and chairman of Patient Rights Advocate — thinks that the new executive order will help allow price transparency data to be communicated in a way that is actually useful for patients making care decisions.

“President Biden rolled back the regulations to allow for estimates, averages, and algorithms — none of which can help patients make informed decisions. President Trump’s executive order reverses these rollbacks to require only actual prices, not estimates. The order also calls for data standardization, which will allow technology developers to easily aggregate prices to make them actionable for patients,” she declared.

In her view, the public availability of real prices will “forever transform” the U.S. healthcare system.

The disclosure of real prices creates a more functional, competitive marketplace and allows consumers to lower their costs through choice and competition, Fisher stated.

“When patients can see that the fair market price for a colonoscopy is $1,000, they would refuse to go to a hospital charging $12,000,” she explained.

Without the ability to view upfront prices, purchasers of care — patients, taxpayers, employers and unions — have no remedy or recourse for overcharges, hidden fees and surprise medical bills, Fisher added.

This opacity has allowed healthcare costs and insurance premiums to skyrocket, and medical debt collections to soar, she declared.

With real prices available, patients can better compare prices and determine where they are being overcharged. Price transparency also empowers employers and unions to design better benefits plans that lower costs and protect from overcharges, Fisher added.

She pointed out that the executive order’s main goal seems to be to crack down on enforcement after the previous presidential administration issued just 18 civil monetary penalties in four years.

“In this bold executive order which increases enforcement, President Trump is putting the healthcare industry on notice that the rules will be robustly enforced,” she stated. “Enforcement has proven to work — when two Georgia hospitals were penalized for noncompliance, they swiftly came into full compliance by posting exemplary files.”

Will compliance improve?

Another healthcare industry executive — Joe Wisniewski, the assistant vice president of channel partnerships and government affairs at price transparency software startup Turquoise Health — agreed that greater transparency could lead to lower healthcare costs for patients.

“With transparency, we can scrutinize the healthcare economy like we might in any other industry. When all the prices are revealed, natural market forces can take effect, ultimately driving costs down to a true fair market rate for an item or service,” he remarked.

He also noted that further guidance and enforcement action from CMS would be welcome  — given it isn’t clear how compliance is going to continue playing out.

“We believe those who have been making a good faith effort to comply will face minimal new challenges, whereas those who have not, will find themselves under pressure to quickly comply with years of phased requirements,” Wisniewski stated.

Historically, payers’ price transparency requirements have been enforced by the state, he pointed out. Under this new executive order, the Trump administration lays the groundwork for CMS to potentially assume this responsibility and deliver the first warnings to payers since enforcement began in 2022, Wisniewski said. 

Payers that have been dragging their feet will find themselves needing to quickly adapt to years’ worth of requirements, or they might begin to face hefty fines, he added.

The same can be said for providers, which have struggled to meet CMS’ requirements, noted Ben Maisano, head of strategy at Tendo, a healthcare platform seeking to simplify patients’ care journeys. He said hospitals probably won’t be able to go about compliance in the slow, haphazard way they have in the past, should this order succeed in increasing CMS enforcement.

Before Tendo, Maisano held C-suite roles at Mount Sinai Health System and Atlantic Health System. 

“With health systems, I think they know they have [comply] and they have to do right by the patient, and they also already kind of do cash rates for people who don’t have insurance. But it’s not easy for health systems to do these things. Sometimes they’re not technologists, and they don’t always have the right tools,” Maisano explained.

However, he is optimistic that increasing the amount of publicly available pricing data is a good thing — as this will allow tech companies to step in and partner with providers to create tools that simplify pricing for patients.

In other words, the more healthcare pricing information is publicly available, the more companies like Tendo and Turquoise can develop tools that truly empower patients. 

Hospitals are bogged down with responsibilities related to patient care and facility operations — they can’t be expected to translate complex billing information into easy-to-understand costs all on their own, Maisano noted.

Is healthcare shopability attainable?

One expert — Hal Andrews, CEO of market research firm Trilliant Health — thinks that hospital compliance is better than reported. The reported non-compliance rates often come from advocacy groups or regulatory bodies, which may use strict criteria.

In his view, hospitals are probably meeting the requirements in ways that aren’t easily captured or assessed.

“The real issue for hospital price transparency isn’t compliance, but the challenge of consumers understanding medical coding language to search the data for a specific procedure coupled with the challenge of comparing multiple hospitals for the same procedure,” Andrews explained. 

This underscores the need for tech companies to step in and create solutions that make healthcare services truly shoppable.

Andrews isn’t convinced that this will solve the problem of opaque pricing in healthcare, though.

To achieve lower healthcare costs for patients, two things must happen. First, pricing data must become transparent, and second, consumers must be able to easily access and understand this information, Andrews explained.

“The current White House administration is clearly focused on the former, but they can do nothing to mandate the latter, since neither providers nor payers have a provider directory to reveal the entire landscape of options for a particular service in a market,” he declared.

To Andrews, the key issue is the lack of comprehensive directories for specific geographic regions. Such directories could show which providers offer a given service, at what price, and under what circumstances. 

Without such a directory, patients can’t compare prices easily. Even if hospitals and payers publish prices, patients might not be able to see all the options available in their area for a particular procedure or treatment. 

With an incomplete market view, it’s difficult for patients, or even employers, to obtain a complete and accurate picture of where to go for the best price or value, Andrews remarked.

Healthcare leaders should look to the airline industry for an example of how pricing data can be communicated in a way that is useful for consumer decision making, he added.

“The best analogy is the history of airline pricing. American Airlines was the first to gather the pricing information in its SABRE [Semi-Automated Business Research Environment] system. Over time, the transparency of the SABRE data allowed aggregators like Expedia, Priceline and Kayak to provide a consumer-friendly user interface, which then prompted the airlines to develop more consumer-friendly websites,” Andrews explained.

More importantly, each airline incorporated technology to understand changes in prices at the market and route level — and this allowed them to respond in real time to a competitor’s price changes, he pointed out.

“Because the consumer is downstream of the contract negotiation between providers and payers, healthcare will never have price elasticity like airlines, but there is a path for consumers to understand their options much better than they do now,” Andrews stated.

How might price transparency impact provider-payer negotiations?

In addition to empowering consumers, increased price transparency may also significantly reshape the provider-payer rate negotiation process — though opinions on its effects are mixed. 

Maisano of Tendo highlighted concerns from providers that full transparency could weaken their negotiating power, especially if some of their competitors fail to comply. He emphasized that CMS’ enforcement must be consistent across the industry to create a level playing field.

“Say you’re a health system, and you’re going to fully comply and let it all out in the open — and someone else doesn’t, but they’re not going to get penalized. Well, then now they have an unfair advantage in the negotiation,” Maisano pointed out.

Without its prices disclosed, the noncompliant health system could undercut the compliant one by offering lower rates to insurers behind closed doors, giving them a competitive edge.

He also noted that price transparency could be more beneficial if providers adopted bundled pricing models rather than just listing line-item charges, making negotiations more straightforward.

Listing the prices for individual services — such as separate fees for anesthesia, facility use and physician services — doesn’t give patients a clear picture of their total cost of care. Instead of presenting pricing data this way, Maisano suggested bundling these charges into one all-inclusive price for a procedure, as this would make it easier for both consumers to compare costs and for providers and payers to negotiate straightforward contracts.

On the other hand, Wisniewski of Turquoise argued that greater transparency and standardization could make contract negotiations less complicated. In his view, better transparency and standardized requirements for both payers and providers will result in simplified contract terms. 

“These simplified contract terms open the door for a simplified negotiation process — that means lower administration time (and spend) needed to execute a single contract and less time spent on revenue recovery. Straightforward, transparent contract terms and rate design reduce denials and underpayments. Most importantly, they lead to strong rate certainty for patients, giving them hard numbers they can use to calculate their own cost sharing,” Wisniewski explained.

But Andrews of Trilliant challenged the assumption that transparency will drive prices down, saying that there is currently massive variation in negotiated rates — oftentimes even within the same market and payer contracts. 

He suggested that over time, price transparency should lead to more uniform pricing — but this hasn’t happened yet because key stakeholders don’t fully grasp the extent of pricing discrepancies.

Andrews maintained that the real issue is the widespread variance in negotiated rates and that this calls into question “what exactly payer networking teams do all day,” he added.

“The history of price transparency in capitalist societies would predict a regression to a mean price for every service in every market, which has not yet happened because no one — particularly employers — understands the massive variance in negotiated rates for the same service from the same payer in the same market,” Andrews remarked.

Where do we go from here?

Going forward, it will be difficult to measure payers’ compliance with price transparency regulations, Andrews pointed out. Because of this, employers will be a key part of ensuring transparency works in practice because they are in a position to demand better data from their insurers and brokers. 

“Most federal agencies cannot even access the files, and those that can don’t have a provider directory to determine whether accurate rates are posted for each provider. As a result, employers are the real ‘forcing function’ to make price transparency effective, and they must require their carriers and brokers to develop benefit plans that deliver value for money, which exists at the intersection of the quality and negotiated rate for a specific service,” Andrews explained.

Another healthcare executive also noted that employers struggle to select health plans that provide workers with accessible benefits in a transparent model. 

Alan Cohen — chief product officer at Centivo, a health plan that only sells to self-funded employers — said that employers need to establish strong provider networks and pair them with transparent, copay-based plans.

“When employers can ensure transparency, their members can make more informed decisions, better anticipate costs, and feel empowered over their health. But without employers putting a strategy in place, this data isn’t useful to the average person,” Cohen stated.

It’s clear that the true success of price transparency measures depends on how well various stakeholders — namely providers, payers and employers — adapt to the rules. Transparency could lower costs and improve decision making for consumers across the nation, but only if the data is accurate and user-friendly.

For now, it appears that employers are poised to be the key drivers of change, pushing for more accessible and transparent health plans. 

Photo: sinemaslow, Getty Images


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