Challenge to medical price transparency harms consumers

One of the few things that Joe Biden and Donald Trump agreed about is requiring health plans to make public the rates they pay to hospitals and other health care providers. Federal rule making has made such transparency a reality for consumers who previously were, as critics note, operating in the dark about the cost of care because a great deal of health care pricing is set through confidential deals.

Keeping these rates a closely guarded secret is not the way competitive markets are supposed to work, yet two business groups — the U.S. Chamber of Commerce and the Pharmaceutical Care Management Association, which represents pharmacy-benefit managers — apparently want consumers to remain in the dark. In August, they filed a lawsuit to block parts of a new federal rule that will require health plans and employers with self-funded plans to disclose prices they pay for medical services and drugs.

Another part of the rule requires them to provide price disclosures for drugs — including a historical net price measurement that factors in the impact of fees, rebates, and other discounts — and make them available in a format that can be read by computers (and used by consumers). The business groups claim that certain provisions of the rule exceed federal authority and could raise medical costs, and the net price requirement will add cost, but at least consumers will be ableto comparison shop.

Similar arguments were made when hospitals challenged a separate federal rule that required them to reveal prices for an array of services, but that rule was upheld by a federal appeals court. A lot of factors could raise health care costs but providing a place to compare prices also could moderate prices for services that are “shoppable.” Without price transparency, how are consumers of health care going to be informed consumers?

In the most recent legal challenge, suits were filed against the U.S. Department of Health and Human Services (HHS) and other federal agencies in federal courts in Tyler, Texas, and the District of Columbia. The Centers for Medicare and Medicaid Services, the agency within HHS that oversees the transparency rule, is also named in the lawsuit. HHS Secretary Xavier Becerra has theorized that “a key to price fairness is price transparency.” While some economists say the effects of revealing previously secret rates isn’t clear, I’m willing to test Secretary Becerra’s theory because what’s good for consumers is also good for business.

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