|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Forcing providers to reveal their secret prices
As reported by the Wall Street Journal yesterday, the Trump administration is considering a new measure that would force providers to reveal the prices they negotiate with insurance companies to deliver services. Part of a 700-page draft regulation released last month regarding interoperability and information blocking, and intended to implement provisions of the 21st Century Cures Act passed in 2016, the rule would require hospitals, doctors, and other care providers to publish negotiated rates and make them available to patients. The administration is seeking public comment on the proposed rule before May 3rd. The WSJ quotes Dr. Don Rucker, national coordinator for health information technology at the Department of Health and Human Services (HHS), who characterized the proposal as an attempt to “help put Americans back in control of price data”, in order to “empower the American public to shop for their care.” Under the proposal, providers could be fined as much as $1M for blocking information. Starting this year, hospitals have been required to publish their list prices, or chargemasters, in a machine-readable format on their websites, but that requirement has been widely viewed as ineffective and unhelpful for patients, particularly those covered by commercial insurance who typically pay a discounted price negotiated by their carrier.
Reaction to the proposal was mixed. A spokesman for the American Hospital Association warned that revealing negotiated rates could “undermine the choices available in the private market,” while patient advocates hailed the proposal for its potential to enable greater comparison shopping by consumers. The move is part of a larger effort by the Trump administration to increase transparency in healthcare, in order to enable greater consumer choice and to reduce costs by encouraging competition among providers. While we recognize, as research has shown, that price transparency alone will not solve healthcare’s cost problem, we believe the new proposal is a long-overdue step in the right direction. We’d go further and insist on full transparency of pricing across healthcare—among insurers, drug companies, group purchasing organizations, pharmacy benefit managers and others. For all the rhetorical concern about high provider prices, the truth is that the entire industry has profited from high and rising prices for care, leaving consumers and employers holding the bag for outsized inflation for years. Fully transparent pricing would allow third parties to construct truly useful comparison-shopping tools and would surely drive prices downward. Rather than continuing to resist calls for greater transparency, we believe providers should embrace the shift, and put themselves on the side of patients and consumers. Kudos to the team at HHS for advancing this important measure—we hope they go even further.
A key regulator announces his resignation
In a surprise announcement this week, Food and Drug Administration (FDA) commissioner Scott Gottlieb revealed his intention to resign his post at the end of March. His resignation was not anticipated by the Trump administration, and Gottlieb cited a desire to spend more time with his family as the reason for his decision to step down. No immediate successor was named, although it is expected that Gottlieb will be replaced at least on a temporary basis by an acting commissioner while a permanent replacement is sought. In his resignation letter to Health and Human Services (HHS) Secretary Alex Azar, Gottlieb cited his work in fighting the opioid epidemic, cracking down on tobacco use, and addressing underage vaping as key accomplishments. Azar hailed Gottlieb as an “exemplary public health leader”, and President Trump praised him on Twitter, saying “Scott has helped us to lower drug prices, get a record number of generic drugs approved and onto the market, and so many other things.”
Although critics initially worried about Gottlieb’s ties to industry, he quickly proved to be an engaged and aggressive advocate for public health and forged a reputation as a keen regulator in an otherwise anti-regulatory administration. A physician, Gottlieb was particularly outspoken in his attempts to curb tobacco use, looking to reduce the amount of nicotine in cigarettes, limit the sale of menthol cigarettes, and clamp down on the explosion in teenage vaping. Gottlieb was a frequent presence on the conference circuit and a heavy user of Twitter, using his elevated public profile to highlight FDA initiatives on food safety, nutrition policy, drug approvals, and more. His departure has raised concerns that regulatory progress will now stall, and that the tobacco, pharmaceutical, and agricultural lobbies will enjoy greater leeway under his successor. The FDA is an extraordinarily powerful regulatory authority, overseeing as much as one-fifth of the nation’s economy. Scott Gottlieb was a steady, competent steward of that authority—we hope his replacement will prove equally qualified.
A dose of bipartisan advice on addressing healthcare costs
This week a bipartisan group of economists submitted policy recommendations to Senator Lamar Alexander (R-TN), in response to his letter last December soliciting suggestions for actions Congress could take to reduce costs and incentivize improved care and patient decision-making. In a joint letter, economists from the Brookings Institution and American Enterprise Institute (AEI), representing a broad range of political perspectives, recommended thirteen specific actions, largely centered around expanding value-based payment, improving transparency, and increasing competition. The proposals with the best odds of legislative action include measures to eliminate surprise billing (with legislation already submitted to Congress) and support price transparency. Recommendations to limit tax breaks for employer-sponsored insurance are unlikely to gain Congressional traction.
All in all, the AEI-Brookings recommendations included few surprises and were comprised of solutions that have been advanced for years by economists and analysts. There seems to be a growing bipartisan consensus among policy experts on a set of centrist solutions to reduce healthcare spending and reform care delivery—even as Congressional leaders have spent time debating policies promoted by the extremes of their parties, pitting “repeal and replace” against “Medicare for All”. The politics of healthcare have become increasingly polarized, while leaders at the Centers for Medicare & Medicaid Services (CMS) and elsewhere have been steadily working to advance transparency, increase competition, and expand the impact of value-based payment reforms. Moving forward, we’d expect any progress on the expert recommendations to come from regulatory action rather than legislative activity, notwithstanding Sen. Alexander and others seeking input from industry experts.