Improving Price and Quality Transparency in American Healthcare To Put Patients First

Overview

Objective and Scope Executive Order 13877, signed by President Donald Trump on June 24, 2019, aims to improve price and quality transparency within the American healthcare system. This Executive Order addresses significant hurdles faced by patients in obtaining clear pricing information due to the opaque nature of pricing structures often fostered by third-party payers and large healthcare conglomerates. Such structures create inefficiencies and potentially increase costs for patients and taxpayers. By introducing transparency, the Executive Order seeks to empower patients to make well-informed healthcare decisions, thereby encouraging competition among providers and driving down costs.

The Role of Shoppable Services A key focus of the Order is on shoppable services, which comprise common healthcare services provided by multiple providers and hence allow patients to compare options based on price and quality. According to the Order, services such as imaging have seen substantial savings—up to 19%—when patients engage in price-shopping practices. The intended broad adoption of shoppable services would help dismantle economically inefficient monopolistic practices by certain healthcare providers and create a more patient-centric healthcare environment.

Administrative Actions EO 13877 mandates a series of specific administrative actions designed to enact its vision of transparency. These include promoting regulations requiring hospitals to publish standard charge information, developing price comparison tools for patients, outlining a Health Quality Roadmap for data alignment across federal programs, and enhancing access to de-identified healthcare data for researchers and entrepreneurs to innovate within and refine healthcare services. Additionally, the Order addresses the predicament of surprise medical billing, urging federal intervention to protect patients from unexpected, exorbitant healthcare costs.

Strategic Empowerment of Patients The Order advocates for enhanced patient control over healthcare finances, notably leveraging tools such as high-deductible health plans, health savings accounts, and flexible spending arrangements. The instructions for the Treasury to develop guidelines that permit coverage of more preventative services through these accounts, aim to refine patient empowerment further and align healthcare spending with better health outcomes. The intent is to instill a culture of informed financial decision-making among patients.

Addressing Unnecessary Barriers The Executive Order emphasizes dismantling unnecessary legal or institutional barriers that restrict the flow of information between patients, providers, and insurers. By mandating comprehensive reporting and maintaining systems that promote transparency and patient engagement, the order envisions a marketplace where consumers can efficiently guide their healthcare choices based on intelligible and accessible information.

Legal and Policy Implications

Regulatory Changes EO 13877 initiates significant regulatory undertakings. It instructs the Secretary of Health and Human Services to propose regulations that would compel hospitals to disclose prices. These changes expand the existing legal responsibilities of healthcare providers by mandating increased transparency in pricing structures, making the federal government a more active participant in healthcare pricing strategy.

Legislative Adjustments Although the Order itself does not change statutory law, it requires legislative-like actions from involved federal agencies, impacting how they interpret and enforce existing healthcare laws. For instance, changes in the interpretation of the anti-kickback statute or the Stark Law may emerge, ensuring practical alignment with the Order's transparency and competition goals.

Incentives for Financial Products Within Treasury's remit, the Order requests guidance related to high-deductible health plans and health savings accounts, signaling an endorsement of these products. This aligns financial policy with the healthcare regulation goals, potentially redefining tax policy related to medical expenses. Such policy maneuvers imply a government endorsement of market-driven healthcare solutions over traditional entitlement-based approaches.

Consumer Protection Policy The stipulations concerning surprise billing reflect a crucial shift towards consumer protection within healthcare policy. By framing the prevention of surprise billing within a regulatory context, the Order implies strengthened legal frameworks protecting consumers, possibly pushing for new legislative proposals reinforcing these protections.

Quality and Metrics Standardization The directive to establish a Health Quality Roadmap suggests substantial changes in how healthcare quality metrics are managed and reported. It seeks to standardize quality measures across federal healthcare programs, enhancing accountability. This adjustment might lead to revisiting existing policies on healthcare quality reporting, facilitating better integration across different programs.

Who Benefits

Patients and Healthcare Consumers The primary beneficiaries of EO 13877 are expected to be healthcare consumers, i.e., patients. By facilitating access to price and quality information, the order empowers consumers to compare various healthcare options, ideally leading to lower out-of-pocket costs and better health outcomes. Hence, patients gain the capacity to make decisions that align with their financial and medical needs.

Innovators and Researchers By enhancing access to de-identified healthcare data, the Order provides substantial resources for researchers and innovators seeking to develop technologies and solutions that improve healthcare delivery. This data access can fuel innovations in telemedicine, artificial intelligence, and patient care management systems, fostering a vibrant healthcare technology sector.

High-Deductible Plan Participants People enrolled in high-deductible health plans stand to benefit from increased flexibility and cost-effectiveness. Policies encouraging broader use of tax-advantaged accounts like health savings accounts serve to empower these individuals financially, allowing them greater control over how they choose to meet their healthcare needs.

Small-Scale Healthcare Providers The increased transparency enforced by the Order may level the playing field between small-scale providers and larger hospital systems. By fostering competition on price and quality rather than entrenched negotiation capacities with insurers, smaller facilities could attract patients based on transparent and affordable pricing models.

Taxpayers and the Economy In the broader economic context, taxpayers could benefit from policies that potentially lower the cost burdens of public healthcare expenditure. With an emphasis on reducing inefficiencies and surprise billing, government-spending efficiency could improve, thus reducing the financial pressures taxpayers face in funding public healthcare commitments.

Who Suffers

Large Hospital Systems Large hospital systems and integrated healthcare networks are likely to face challenges due to increased price and quality transparency requirements. These changes could inhibit the ability of large providers to command premiums based on non-transparent negotiated rates, potentially impacting their revenue streams.

Insurance Companies Insurance companies may face pressure as transparency requirements and reduced surprise billing practices render pricing schemes more public. Insurers often operate complex pricing models, and simpler, publicly disclosed pricing may impede their ability to offer certain products or extract higher premiums from specific consumer segments.

Out-of-Network Providers Providers out of network with prominent insurers could be negatively impacted by the surprise billing stipulations, which could incentivize patients to avoid facilities and specialists not aligned with their chosen insurance network. This could mean reduced patient volumes and consequential financial stress.

Entities Preferring Opaque Markets Companies, such as pharmaceutical and medical supply firms, which have profited from opaque or convoluted pricing arrangements, might encounter pressure or financial setbacks as transparency initiatives push for changes in how prices are made available to consumers.

Middlemen in Healthcare Transactions Entities such as medical billing companies and other intermediaries within healthcare transactions might be affected by streamlined processes emphasized by transparency initiatives. With direct pricing information, the reliance on intermediaries can diminish, directly influencing their business models dependent on navigating complex reimbursement and billing systems.

Historical Context

Transparency as a Policy Trend EO 13877 represents a continuation and intensification of broader policy trends demanding increased transparency in healthcare, a priority raised sporadically over several administrations. Similar calls for transparency have been evident in the policies aimed at reducing drug prices and increasing consumer access to healthcare information.

Trump Administration's Healthcare Approach The Order aligns with the Trump administration's tendency to favor market-driven strategies and consumer empowerment in the healthcare arena. The administration has frequently criticized over-regulation, championing instead deregulation as a catalyst for innovation and competition.

Contrast with Affordable Care Act (ACA) While the ACA mandated transparent practices, particularly through health exchanges, the Executive Order attempts a more direct intervention into hospital and provider pricing, separate from insurance plans. It further indicates a shift toward transparency at the point of care, as opposed to only insurance marketplaces.

Continuity with Prior Initiatives The Executive Order builds on prior directives like EO 13813. Both orders aim to foster healthcare choice and competition, indicating a sustained administrative objective to transform the cultural landscape around healthcare consumption and provider behavior.

Long-term Structural Change While previous administrations have included transparency in their long-term healthcare objectives, the specificity and actionable directives in EO 13877 suggest a more granular approach to achieving this change. The Order's focus on actionable data and shoppable services exemplifies a stance advocating for proactive structural adjustments to instigate lasting change in the healthcare system.

Potential Controversies or Challenges

Legal Battles Over Regulations The regulatory changes mandated by EO 13877 may face significant legal challenges, particularly from hospital systems and insurance companies contesting the scope and enforceability of transparency requirements. Prior efforts to mandate price transparency often led to litigation, as various stakeholders question executive authority versus legislative prerogatives.

Implementation and Compliance Concerns Practical challenges will arise in implementing the Order's transparency requirements. Hospitals and healthcare providers might face difficulties converting complex pricing structures into consumer-friendly formats, potentially straining compliance resources or prompting pushback against perceived burdensome regulation.

Political Opposition Certain congressional factions and state governments may perceive an encroachment on states' rights and regulatory powers. Given healthcare's politicization, the Order could face opposition as part of a broader agenda to limit federal involvement or protect existing systems seen as vulnerable to disruption.

Potential Privacy Issues The Order’s call for increased access to de-identified healthcare data raises concerns about patient privacy and data security. Balancing the utility of such data to researchers with patients' rights to privacy could inspire further scrutiny and potential legislative action to accommodate these dual imperatives.

Economic Impact Assessment While the Order aims to reduce healthcare costs, its economic impact on existing structures remains uncertain. Critics may challenge the effectiveness of price transparency in significantly altering patient behavior to the extent hypothesized by the Order, warranting continued assessment of its real-world implications.