Analysis: Disruption possible if negotiated rates are publicly posted

The Wall Street Journal is reporting “President Trump is expected to release an executive order as early as [the week of 5-27] to mandate the disclosure of prices in the health-care industry, according to people familiar with the discussion. The order could direct federal agencies to pursue actions to force a host of players in the industry to divulge cost data, the people said.

The administration is also looking at using agencies such as the Justice Department to tackle regional monopolies of hospitals and health-insurance plans over concerns they are driving up the cost of care, according to two people familiar with the discussions.

The administration is also likely to use a coming hospital outpatient rule to require hospitals to disclose their negotiated rates with insurers, two people said. The rule is expected this summer as part of the proposed FY 2020 Outpatient Prospective Payment System rule.”

Takeaway

The public posting of negotiated rates will likely be highly disruptive and could shift competitive contracting dynamics in markets across the country, particularly if it is paired with changes to gag, anti-tiering and all-or-nothing clauses contemplated in the Senate HELP draft price transparency bill (Lowering Health Care Costs).

One can also imagine that this data will also be incorporated into existing (or new) price transparency apps that will empower consumers to make informed decisions about where to receive elective healthcare services.

From a technical perspective, it will be interesting to see how the Trump administration justifies requiring disclosure from a statutory perspective.

The administration will lean on what it believes is existing authority under a range of healthcare related laws: 21st Century Cures, ERISA, ACA and HIPAA, according to The Wall Street Journal.

Regardless of how they justify it, I would anticipate that one or more court challenges will follow and attempt to require the disclosure of negotiated rates.