A longtime hospital CEO in New Jersey is calling for price transparency — even advocating for disclosure of negotiated prices between hospitals and insurers — as the industry pushes back against attempts by the Trump administration to force highly secretive rates out into the open.
"The current healthcare market is a complex system of secret deals and discounts between insurance companies and healthcare providers," Michael Maron, CEO of Holy Name Medical Center in Teaneck, New Jersey — located about 14 miles outside of Manhattan — wrote recently in a letter responding to proposed regulations that include tackling pricing issues.
"For decades, insurance companies and powerful provider systems have succeeded in keeping their negotiated rates veiled from public view using non-disclosure agreements and restrictive contractual gag clauses," he wrote.
Maron's ideas conflict with powerful lobbying groups representing major healthcare institutions and insurance companies.
The American Hospital Association, of which Maron is a member, said the proposed approach of releasing negotiated rates "misses the mark" adding price is not the sole factor patients consider when deciding where to receive care.
"Disclosing negotiated rates between insurers and hospitals could undermine the choices available in the private market," Tom Nickels, executive vice president of AHA, said in a statement. AHA represents nearly 80% of the nation's hospitals and lobbies on their behalf.
The lobbying group representing the nation's insurance companies also balked at the transparency proposal, arguing the disclosure could harm competition and lead to higher prices.
"If every contract and every negotiated rate were public, no doctor or hospital would want to be paid the lowest rate — they would all be motivated to demand higher payments. And health care costs would rise for all Americans as a result," America's Health Insurance Plans CEO Matt Eyles said in a statement.
The push for pricing transparency comes as more Americans rely on high-deductible health plans for their insurance coverage. Those plans can result in consumers paying for a greater portion of their own healthcare.
Consumer spending has increased dramatically over the past two decades. In 1997, out-of-pocket spending was $589 per capita, growing to $1,124 in 2017, according to a Kaiser Family Foundation analysis of National Health Expenditure data.
The top concern for Americans continues to be healthcare as they fret over affordability and access to care, a recent Gallup Poll shows. Americans worry more about healthcare than crime or the economy.
"As healthcare becomes more expensive and more unaffordable, the demands for price transparency are only going to increase," Steve Wojcik, vice president of public policy for the National Business Group on Health, told Healthcare Dive. NBGH does not support disclosing prices negotiated across all plans. Instead, NBGH supports patients having access to their "out-of-pocket expenses and total plan expenses for providers and services for the specific coverage they have," he said.
But some economists are skeptical about whether releasing the prices insurers agree to pay doctors will lead to reducing healthcare spending, which starts with consumers using pricing data to switch to lower-cost providers.
There are even some instances when public disclosure could potentially harm markets, according to one economist, Chris Garmon, who used to work for the Federal Trade Commission. Garmon is now a professor at the University of Missouri – Kansas City.
Pricing data and its usefulness also depend on the local market and state of competition there, Garmon told Healthcare Dive.
In markets with limited competition, the data could promote "tacit collusion," he said.
"For instance, it could allow one provider to follow and match the prices of the other provider (like two gas stations across the street from one another who face no other competition)."
And there are some instances in which patients don't have the luxury to shop for the best price, such as in emergencies.
The assumption behind many pricing transparency efforts is that if patients have access to pricing data, as they do when shopping for other goods, they will spend less by switching to low-cost providers.
Yet several studies have thrown cold water on the assumption that unfettered access to pricing data will change patient behavior.
One study of employee healthcare decisions in JAMA found that pricing tools made available to employees did not lower aggregate outpatient spending — it actually increased it, although modestly. The study also found that few people used the tool while shopping.
Why would spending increase if patients had access to pricing tools? The authors suggest that consumers may equate low-cost providers with inferior care.
Even if pricing data is available, there are other factors that undermine shopping, including a patient's relationship with an existing provider.
"To date, price transparency efforts have not spurred price shopping or reduced health care spending," another report on price transparency in the New England Journal of Medicine article noted.
Hints that the government could soon mandate more price transparency were tucked into two larger HHS proposed regulations on interoperability in February. The comment period closed Monday.
More than 3,000 comments were submitted in response to the proposed rules as of Friday.
An HHS official said the agency received an "unusual" amount of comments from individuals. Many of the commenters shared frustrating experiences with the healthcare system and its prices.
The agency said it is now reviewing the comments.
Maron, CEO of the standalone hospital in New Jersey, said he'll continue to advocate for both a consistent pricing and payment structure, something the system now lacks.
"A lot of data gets lost in this big black box," he told Healthcare Dive. "If you don’t make pricing transparency and consistency a top issue, the rest of it is B.S."