Both Payers, Providers Have Reasons to Resist Revealing Negotiated Prices

By Leslie Small

The Trump administration is considering requiring health care providers to disclose the prices they charge different health insurers for services — an idea meant to promote transparency and consumerism that experts say could also have the effect of complicating payer and provider rate negotiations.

If the administration’s idea becomes a reality, hospital rates could face downward pressure as less favorable contracts with certain payers become public knowledge, thus incentivizing payers to renegotiate for lower rates, according to Wall Street analyst Ana Gupte. But on the flip side, “certain hospitals could demand higher rates if they find that a crosstown rival is receiving higher reimbursement” from a payer, which may be problematic for insurers, she wrote in a note to investors.

Ultimately, such a policy could “increase average rates or eliminate some of the lower rates that exist in the market,” Caroline Pearson, a senior fellow at NORC at the University of Chicago, tells AIS Health.

But would having more consistent rates that insurers pay for health care services truly be a bad thing?

“There’s certainly reason to think that we should have somewhat less variation in the rates, in [that] you actually sort of want to discourage monopolistic behavior and so you would like to give smaller health plans the benefit of having more competitive rates,” Pearson says. Thus, smaller insurers might benefit from greater rate transparency — but possibly at the expense of their larger peers.

In the end, both payers and providers would likely lobby against any proposed rule that shines a light on negotiated prices for health care services, Gupte wrote, reasoning that “we believe there is risk to both sides if these contracts were made public.”

From Health Plan Weekly