“If I’m an employer, I’ll look at three hospitals in my area and say, ‘I’ll pay the price for the lowest one. If you want to go to one of the other two, you can pay the difference,’” said Anderson.
Will Price Transparency Reduce Overall Health Spending?
Revealing actual negotiated prices, as this rule requires, may push the more expensive hospitals in an area to reduce prices in future bargaining talks with insurers or employers, potentially lowering health spending in those regions.
It could also go the other way, with lower-cost hospitals demanding a raise, driving up spending.
Bottom line: Price transparency can help, but the market power of the various players might matter more.
In some places, where there may be one dominant hospital, even employers “who know they are getting ripped off” may not feel they can cut out a big, brand-name facility from their networks, no matter the price, said Anderson.
Is the Rule Change a Done Deal?
The hospital industry went to court, arguing that parts of the rule go too far, violating their First Amendment rights and also unfairly forcing hospitals to disclose trade secrets. That information, the industry said, can then be used against them in negotiations with insurers and employers.
But the U.S. District Court for the District of Columbia disagreed with the hospitals and upheld the rule, prompting an appeal by the industry. On Dec. 29, the U.S. Court of Appeals for the District of Columbia affirmed that lower-court decision and did not block the rule.
In a written statement last week, the American Hospital Association’s general counsel cited “disappointment” with the ruling and said the organization is “reviewing the decision carefully to determine next steps.”
Apart from the litigation, the American Hospital Association plans to talk with the incoming Biden administration “to try to persuade them there are some elements to this rule and the insurer rule that are tricky,” said Tom Nickels, an executive vice president of the trade group. “We want to be of help to consumers, but is it really in people’s best interest to provide privately negotiated rates?”
Fisher thinks so: “Hospitals are fighting this because they want to keep their negotiated deals with insurers secret,” she said. “What these rules do is give the American consumer the power of being informed.”