A recent court ruling has given the Trump administration a major victory in its push for transparency in health care pricing, and has left many health care providers scrambling to meet new requirements.
While the burdens of meeting the requirements are high, in the end they represent an opportunity for health care providers to separate themselves from the competition and win market share.
The new rules represent an opportunity for health care providers to separate themselves from the competition.
The push for greater transparency in health care pricing from President Trump began in June 2019, when the president issued an executive order for the secretary of health and human services to propose regulations requiring a substantial change to the pricing rules that hospitals must follow. Those rules were issued on November 15.
“Hospitals will be required to make public all hospital standard charges (including the gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient, and the minimum and maximum negotiated charges) for all items and services on the Internet in a single data file that can be read by other computer systems,” the Department of Health and Human Services said in a news release that day.
It didn’t take long for the industry to respond. On December 4, a group of industry associations and health care systems sued HHS, alleging that the department had overstepped its statutory authority. But on June 23, a Washington D.C. District Court denied the suit, prompting an appeal.
For Trump, who campaigned on price transparency in health care, it was big victory.
How will hospitals react?
Until the recent ruling, many health care systems had been in a wait-and-see mode. Based on data assembled by Kaufman Hall, a health care consultancy, only 27% of providers had online price estimation tools.
But hospitals will have until January 1 to meet the new requirements. Given the administrative burden and complexity that is expected for hospitals to fully comply with the rules, we strongly suggest that hospitals act now.
Embracing change
Hospitals have two choices when considering their path toward price transparency, compliance or competitive advantage.
Compliance is the easier, less strategic approach, it simply means that a hospital will comply with the rules, and nothing more.
Competitive advantage, by contrast, treats the new requirements as an opportunity to differentiate service from a competitor. Consumers, after all, want price transparency, but they want it on their terms, and they insist on higher quality and a better experience as well.
This is especially true as consumers shift to high-deductible health plans, which have led consumers to pay increasing attention to the cost of services themselves.
Source: U.S. Bureau of Labor Statistics, RSM
By approaching price transparency as a way to gain competitive advantage, hospitals can win market share with these patients who are more and more likely to use out-of-pocket costs when making their health care buying decisions.
Another concept that price transparency is promoting is true cost accounting principles that enable more rational pricing strategies as well as an enhanced ability for the hospitals to enter into value-based care arrangements.
The takeaway
Ultimately, the new rules on price transparency will in all likelihood become effective on January 1. We urge our clients to consider approaching this regulation as an opportunity to be more competitive and to leverage it as a way to further their shift toward full value-based care.
