Health care has consistently been one of the most polarizing issues in Washington, and the acrimony, gridlock, and chaos across the board in D.C. only seem to be getting worse.
So I’ve been pleasantly surprised — and cautiously optimistic — to see recent steps at the federal level to address some of the problems in our health care system that are most frustrating for consumers, particularly related to health care prices.
With many of us paying a larger share of our health care bills out of pocket, it’s increasingly important to have clear and accurate information about health care prices. As consumers, we have a right and an expectation to know how much something costs before we buy it. That’s how it is for everything from computers to coffee, and it should be true for health care — but it’s not. Some people say health care is different from others goods and services and too complicated, and use that as an excuse for a lack of transparency. But just the opposite is true. Precisely because its complicated, not to mention very costly, is why we need to pierce the veil.
Too often, there’s no way to know in advance what we’ll be charged for a medical procedure or a hospital stay, or how to get the best price for a prescription drug. And when you’re sick and vulnerable, you don’t need the added stress of figuring out whether every person who touches you during a surgery is in-network or whether you’re going to get charged $500 for an aspirin. We’ve all heard horror stories about unexpected or outrageous health care bills. (You can see shocking but not necessarily uncommon examples in the Kaiser Health News/NPR “Bill of the Month” series, and in Sarah Kliff’s deep dive into emergency room bills, at Vox.)
Federal policymakers see opportunities to gain traction in a few areas related to price transparency:
Prescription drug prices. No matter your politics, it’s likely you’re frustrated and angry about the high cost of prescription drugs. At AcademyHealth’s National Health Policy Conference earlier this month, U.S. Health & Human Services (HHS) Secretary Alex Azar highlighted a number of areas where the administration is taking action to lower drug prices and reduce out-of-pocket costs for patients, and Democratic policy staff at the conference shared his optimism for progress in this area.
Last fall, President Trump signed legislation to ban gag clauses that prevented pharmacists from telling customers whether a prescription would cost less if they were to pay for it out of pocket rather than using their insurance. Pharmacists are now free — though not required — to do so.
In addition, HHS has proposed that television ads for prescription drugs (those ubiquitous “ask your doctor about…” commercials) include the list price of those drugs. Drug companies are required to tell you all the major possible side effects of their drugs, but they don’t tell you a thing about their effect on your financial health. Secretary Azar has said,“If we want to have a real market for drugs, why not have [companies] disclose their prices in the ads, too? Consumers would have much more balanced information, and companies would have a very different set of incentives for setting their prices.”
The pharma industry is against this proposal. They argue that list prices are misleading, and that most people don’t actually pay them after accounting for rebates, discounts, and insurance. I get what they are saying, but it’s also true that a lot of patients do pay the list price, or an amount that is based on that list price. Forty-seven percent of Americans have high-deductible health plans, under which they often pay the full list price of a drug until their insurance kicks in. And your insurance copays, or whether a drug even makes it on to your insurance company’s formulary, are partly determined by list prices. If you still don’t think it matters, consider this: the 10 most commonly advertised drugs have list prices ranging from $535 to $11,000 per month or usual course of therapy.
Perhaps the most aggressive proposal on drug prices is a recent plan to end the drug rebate system, which Secretary Azar described as a “shadowy system of kickbacks.” What does that mean? In a typical market, sellers compete on price — all other things being equal, consumers will choose a lower-priced option. When it comes to prescription drugs, though, the incentives are reversed: drug companies deliberately raise their prices, then provide rebates that go to pharmacy benefits managers and health insurance companies. (Milliman has a good explainer about drug rebates.) These arrangements are considered trade secrets and are invisible to consumers. Banning such arrangements could ultimately depress drug list prices and help chronically ill patients who rely on expensive medications to reduce their out-of-pocket costs.
Surprise medical bills. It’s unsurprising (pardon the pun) that one area of recent focus is surprise medical bills, when an insured patient is charged for services inadvertently received by an out-of-network health care provider (for example, a patient could have a scheduled surgery with an in-network surgeon but be unaware that the anesthesiologist was out-of-network). Before New York passed legislation in 2014 to protect patients from surprise bills, this issue was the most common consumer complaint to the State Department of Financial Services. New York’s law is excellent and successful, and a few modest enhancements would make it even better. But other states have been slow to take on this issue; New York was the first, and today only nine states have comprehensive protections from surprise bills.
Now we’re seeing momentum at the federal level to take on surprise bills, with bipartisan support. Multiple proposals have been introduced in the Senate to put an end to surprise bills for emergency room care. And the American College of Emergency Physicians has put out its own plan, demonstrating that ER doctors themselves also want to put an end to surprise bills. President Trump recently said that addressing surprise bills would be a top priority for his administration, and last month he hosted a roundtable in which he invited patients affected by surprise bills to share their stories.
Hospital price transparency. I wrote last month about the implementation of a new policy requiring hospitals to make their prices publicly available on their websites. So far, most of the information is not very useful for consumers trying to make decisions about where to get their care and understand what they might actually pay for it. But as with the television drug ad proposal, it’s a small step toward transparency. When asked about the policy, Secretary Azar reiterated the idea that “more transparent care is better care.” He also noted that nothing is stopping hospitals from going above and beyond the minimum requirements of the federal rule and taking it upon themselves to provide clearer, more relevant price information to their patients.
The challenges surrounding health care affordability go well beyond the issue of price transparency and what consumers pay out of pocket. Transparency has its limits; it alone isn’t enough to lower costs and empower consumers to make better health care decisions. But addressing these common frustrations with some common-sense solutions is a practical starting point. In a time when it’s hard to find common ground, let’s take progress when and where we can.
By David Sandman, President and CEO, New York State Health Foundation
Published in Medium on February 19, 2019