Health and Science

Trump administration proposes rule requiring hospitals to publish the prices negotiated with insurers

Key Points
  • The Trump administration is proposing a rule that would require hospitals to publish the prices negotiated with insurers.
  • Hospitals could be fined up to $300 a day if they fail to make prices available online.
  • President Donald Trump has made lowering health-care costs one of his key priorities.
President Donald Trump speaks to the media before departing the White House en route West Virginia in Washington, July 24, 2019.
Mary F. Calvert | Reuters

The Trump administration is proposing a rule that would require hospitals to publish the prices that are negotiated with insurers or risk being fined.

The proposed rule, announced Monday, would apply to the roughly 6,000 hospitals that accept Medicare. Hospitals could be fined up to $300 a day if the standard and negotiated prices for services are not posted online. 

Starting this year, the administration required hospitals to publish list prices, or the sticker price. That does not reflect what someone might pay with insurance. The proposed rule would go a step further and require hospitals to also post the prices various insurance plans pay.

President Donald Trump has made lowering health-care costs one of his key priorities.

"We're trying to change the paradigm here," Centers for Medicare & Medicaid Services Administrator Seema Verma said on a call with reporters. "We're trying to ensure we have a competitive free market where providers can compete on cost and quality and patients have the information they need to seek high-quality providers."

The public comment period will be open until the end of September. If finalized, the rule would take effect in January.

Hospitals and insurers are certain to fight the proposed rule. These companies have already criticized Trump's executive order requiring hospitals and insurers to disclose negotiated rates for services, saying transparency could actually increase prices. The effort announced Monday would codify Trump's order.

"Publicly disclosing competitively negotiated, proprietary rates will push prices and premiums higher — not lower — for consumers, patients, and taxpayers," Matt Eyles, president and CEO of America's Health Insurance Plans, said in a statement.

American Hospital Association CEO Rick Pollack in a statement called "mandating the disclosure of negotiated rates" the "wrong approach." He said the move could "seriously limit" patients' choices and "fuel anticompetitive behavior" among insurers.

"While we support transparency, today's proposal misses the mark, exceeds the Administration's legal authority and should be abandoned," Pollack said.

But the administration argues forcing companies to disclose the negotiated rates would instead empower patients. As part of the proposal, the administration would require hospitals to publish insurer-specific prices for at least 300 "shoppable services" consumers might consider beforehand, such as X-rays or lab tests.

However, people tend not to shop around for health care like they would for other services. Verma said the administration does not expect the proposed rule to change much when it comes to emergency services. Rather the proposal aims to encourage people to act more like consumers than patients for acute services.

"For certain types of services, MRIs, certain scheduled services, people can shop around," Verma said. "I think when they see the varying prices for services, they will start to shop around for services."

The administration is also seeking comment on what other information would be useful to consumers, such as the median negotiated rates for various health services, Verma said.

In a separate proposed rule announced Monday, CMS said it would pay doctors treating end-stage renal disease higher rates if they use "new and innovative equipment and supplies." The administration said the policy is part of its goal to "spur innovation" and encourage dialysis providers to use the latest treatments.

Trump earlier this month signed an executive order to encourage more kidney transplants and at-home dialysis treatments. About 30 million U.S. adults are estimated to have chronic kidney disease and most are not diagnosed, according to the Centers for Disease Control and Prevention. Treating the disease costs Medicare more than $110 billion a year, according to government data.

— CNBC's Berkeley Lovelace Jr. contributed to this report.

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