Trump Issues Executive Order Intended to Require Disclosure of Negotiated Rates Between Insurers, Hospitals

President Donald Trump today issued an executive order intended to open the door for more transparency around healthcare costs. The order directs federal agencies to initiate the rulemaking process for requiring the disclosure of negotiated rates between insurers and hospitals.

The order would require payers to provide patients estimates of their out-of-pocket costs before they receive their care and would require hospitals to disclose the prices that patients and insurers will pay in an easy-to-read, patient-friendly format. According to the administration, the move will pull back the secrecy surrounding costs and allow consumers and employers to shop for lower costs of care and benefits.

“With today’s historic action, we are fundamentally changing the nature of the healthcare marketplace,” said Trump as he issued the executive order. “This is bigger than anything we’ve done in this particular realm. We will empower patients with the information they need to search for the lowest cost and the highest quality care.”

In directing federal agencies to initiate the process, the language of the order will allow HHS to decide via rulemaking whether insurers and hospitals will need to publish individual rates or if they can publish aggregate rates.

Federal officials praised the executive order, with CMS Administrator Seema Verma saying in a statement that the announcement exemplifies Trump’s commitment to ensuring Americans have the right to know the price and quality of their healthcare.

HHS Secretary Alex Azar also commented, releasing a statement that said, “The President’s action today represents one of the major steps in the long history of American healthcare reform, and one of the most significant steps ever taken to put American patients in control of their care. For decades, America’s healthcare system has kept price and quality information secret from the patients who need it.”

During the signing, R. Larry Van Horn, PhD, associate professor of management at Vanderbilt University’s Owen Graduate School of Management, said the order will likely reduce costs while improving outcomes, access, and value. According to Van Horn, the order will also benefit the overall economy by leaving more money in consumers’ wallets to spend on other goods.

As expected, the order came with quick pushback from the insurance industry, which disputed claims of reduced healthcare costs. In a statement from America’s Health Insurance Plans, president and chief executive officer Matt Eyles said, “Publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher—not lower—for consumers, patients, and taxpayers.”

He added: “Requiring price disclosure for thousands of hospital items, services, and procedures perpetuates the old days of the American healthcare system paying for volume over value. We know that is a formula for higher costs and worse care for everyone. We should be accelerating our efforts to pay for healthcare based on value and quality.”

In addition to requiring the disclosure of negotiated prices, the executive order also instructs the administration to lay out a roadmap for consolidating quality measures across federal programs and to provide government data that could be used to improve healthcare. Additionally, the order says that the Department of Treasury should expand services to encourage the use of health savings accounts.