Why hospital price transparency is essential to improving employee benefits

Despite healthcare price transparency regulations being in effect for the last four years, there's been little impact on the overall cost of care in the U.S. But the Trump administration seems determined to give the regulation teeth. 

President Donald Trump signed an executive order requiring the Departments of Labor, Treasury and Health and Human Services to implement regulations that would further enforce the Hospital Price Transparency Rule and the Transparency in Coverage Rule by late May. The rules first came into effect during Trump's first administration, which mandated hospitals and insurers to share the costs of all services in machine-readable files. President Joe Biden signed another executive order in 2021, placing fines on uncompliant hospitals. 

Yet, just 21% of hospitals actually meet federal requirements, according to non-profit Patient Rights Advocate. A majority of hospitals are either completely ignoring the mandate or submitting illegible data, making it hard for consumers — including employers — to shop for quality, cost-effective care.

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"The data itself is very much imperfect," says Mairin Mancino, senior adviser of policy at Peterson Center on Healthcare. "It's hard to manipulate, and it takes data scientists months and months to make it into something useful. We're hopeful the administration will get these files cleaned up so that employers have the information they need when purchasing [plans] in the future."

Ideally, access to this data would enable employers to pinpoint which hospitals and providers offer the best services for the best prices, explains Mancino. If one hospital is charging four times as much as the hospital down the road for the same procedure, it's worth exploring why there are added costs. More often than not, it's an arbitrary upcharge that has less to do with the provider's performance and more to do with the lack of transparency.

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"We know from the data that we do have that there are massive price differentials even within hospitals that don't seem to be supported by anything other than pricing power by incumbents like hospitals," says Mancino. "So that has done a lot to galvanize employers to say, 'Hey, we're not getting a good deal.'"

Mancino is confident that more pricing information will push employers to change their health plans, whether or not they're self-insured. Given that Aon predicts health benefit costs will go up 9% this year, most employers won't have a choice. However, instead of cutting down their employees' access to care, employers can opt for stronger, if not smaller, provider networks. 

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"Spending has been increasing across all of healthcare, but it's been particularly prominent in the employer market," says Mancino. "Better pricing data can help employers make novel benefit design decisions that are going to hold down costs and increase quality."

While no one knows what shape Trump's executive order will take in May, Mancino is optimistic that more hospital and insurer data will come to light. In the meantime, she encourages employers to call their members o

 Congress and voice their need for clean, readable care data. 

"Get in touch and get involved," says Mancino. "This is your opportunity to express your desire for more information so you can make better decisions with your healthcare dollars."