Biden says he’ll enforce Trump-era rules requiring hospitals to post their prices

Washington Post

July 12, 2021 2:52 pm

President Biden is putting his foot down on a price transparency rule that many hospitals have skirted over the past seven months.

On Friday, Biden released an executive order instructing the Secretary of Health and Human Services to “support” price transparency regulations issued by the Trump administration.

Starting on Jan. 1, hospitals were required to post the prices they charge cash-paying customers and the rates they negotiate with insurers — figures that were largely obscured from public scrutiny. Proponents of greater hospital transparency championed the change, saying it would help patients shop for better deals and drive down health care prices. Until now, it was unclear exactly how the Biden administration would approach the Trump-era rules, even as advocates and some lawmakers urged stronger enforcement amid signs of widespread noncompliance. 

Friday’s executive order still didn’t provide many details, but it signaled that the new administration views the transparency rules as valuable, even if they ultimately don’t pack as much of a punch as former president Donald Trump had claimed.

Recent studies have found that many hospitals aren’t complying with the rule.
  • A study published in the American Journal of Managed Care last month looked at 20 prominent U.S. hospitals and found that only 60 percent listed their cash prices on their websites, as of February. Only 5 percent displayed the minimum charges that they negotiated with insurers.
  • Another study published in the journal JAMA Internal Medicine found that some 83 percent of hospitals are not fully complying with the price transparency rules.

Many hospitals provided a price estimator tool for patients, the JAMA study found, but far fewer provided an easy-to-use file with the prices the hospital negotiated with different insurers.

“Because patient-oriented price estimator tools make prices visible only for a given patient and insurance plan and not to payers or the public, selective compliance may fail to expose abuses of market power, affect price negotiations, or support broad analysis of price variation to the extent intended by the transparency initiative,” the study authors write.

Biden’s executive order is sparse on details, saying that the health secretary should “support existing price transparency initiatives for hospitals” along with any future transparency requirements. But the Department of Health and Human Services began in April to send letters to hospitals that weren’t complying with the rule and indicated it plans to audit a sample of hospitals. 

Transparency advocates, who’d been disappointed by hospitals’ lack of compliance, are hoping the fresh attention from the Biden administration could signal stronger enforcement.

“Biden’s executive order hands the torch to both [Health and Human Services Secretary Xavier] Becerra and Health and Human Services to boldly enforce the rules. It gives them the power to do what they need to do even if it means they need harsher penalties and stricter enforcement,” said Cynthia Fisher, the founder of Patient Rights Advocate, a nonprofit that pushes for price transparency.

The response from hospitals themselves was muted, but Molly Smith, vice president for public policy at the American Hospital Association, told Health 202 that the organization “strongly encourage[s]” hospitals to follow federal guidelines on transparency. 

Still, even with enforcement, the effects of greater price transparency may be modest.

Experts in health care finance have said that the new transparency rules are unlikely to be a silver bullet when it comes to driving down health care costs. 

Many Americans are insulated from the direct cost of treatment because their insurance picks up the tab, and even those patients who pay directly may have a hard time wading through hundreds of pages of complex pricing documents. 

Even when hospitals do post their prices, many Americans don’t know to look for them. Fewer than 1 in 10 Americans say they are aware that hospitals are required to post their prices, according to a recent Kaiser Family Foundation poll.

“Healthcare goods are very complex. We care a lot about quality, and we in essence listen to what our doctor recommends,” said Zack Cooper, a professor of health policy and economics at Yale University. “I think the idea somebody is going to be out there with a price transparency tool figuring out where to go in this market is just not realistic.”

Biden’s executive order also called for action on drug pricing and hospital consolidation. 

The health care provisions come in a sweeping executive order that has 72 initiatives aimed at scaling back monopolies and offering consumers more options in technology, finance, and health care.

The order encourages Federal Trade Commission to crack down on hospital mergers that are harmful to patients and to ban “pay-for-delay” tactics that allow brand name drug manufacturers to pay generic manufacturers to keep their products off the market.

It also directs the Food and Drug Administration to work with states on importing drugs from Canada, another initiative started during Trump’s time in office, as our colleague Amy Goldstein reports.

“Just a handful of companies control the market for many vital medicines, giving them leverage over everyone else to charge whatever they want,” the president said before a signing ceremony at the White House. “As a result, Americans pay two and a half times more for prescription drugs than any other leading country.”