Executive Order on Healthcare & Employer Costs: 3 Changes Coming

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

Executive Order on Healthcare & Employer Costs: 3 Changes Coming

On June 27, 2019, President Donald Trump signed an executive order that makes a unique start toward cost control in healthcare. Because employers pay for 34% of all healthcare dispensed in America, they represent one of the largest, independent stakeholders in the fight to gain better control of rising costs.

Aimed at improving price and quality transparency in healthcare, the order is intended to hold suppliers, (healthcare providers) more accountable by increasing the availability of pricing and quality information, as well as protecting patients from surprise medical bills.

The following 3 areas highlight the areas on which the Executive Order is focused, the details of the order in laymen’s terms, as well as the deadlines for the various agencies charged with adhering or responding.

1. Pricing

Current Problem:
When it comes to pricing, the U.S. health-care system is virtually opaque for consumers. Patients purchase policies, often through their employers, with an awareness of their out-of-pocket expenses, but nobody really has a clear understanding of what providers charge, or how they arrive at that pricing.

This intentional lack of transparency helps hospitals, doctors, pharmaceutical companies and insurers avoid criticism and competition, and has served as a major complication in government and employer efforts to get prices under control.

Within 60 Days:

  • Trump’s Executive Order requires hospitals to publicly post standard charge information for services, supplies or fees billed by the hospital or provided by employees of the hospital in an easy-to-understand, consumer-friendly and machine-readable format.
  • Require hospitals to regularly update the posted information and establish a monitoring mechanism for Health and Human Services to ensure compliance with the posting requirement, as needed.

Within 90 Days:

  • Require healthcare providers, health insurance companies and self-insured group health plans to provide information about expected out-of-pocket costs for items or services to patients prior to receiving care.

Within 180 Days:

  • Require Secretaries of HHS, the Treasury and DOL to issue an advance notice of proposed rulemaking to solicit comments on a proposal to describe the manners in which the federal government or the private sector are impeding healthcare price and quality transparency for patients.
  • Requires those agencies to then provide recommendations for eliminating these impediments in a way that promotes competition among healthcare providers and facilities.

Intent of the Executive Order:

  • Short term, price transparency is intended to inform patient decision-making by allowing them to compare pricing between hospitals.
  • It requires healthcare providers such as hospitals to simplify their pricing — for example, by bundling the costs involved in common treatments.

What is a “bundled payment” you ask? And how does it help curb costs?

Under a bundled payment model, providers and/or healthcare facilities are paid a single payment for all the services performed to treat a patient undergoing a specific episode of care. An “episode of care” is the care delivery process for a certain condition or care delivered within a defined time frame.

Example: If a patient undergoes surgery, payers would traditionally reimburse the hospital, surgeon, and anesthesiologist separately for their part in the treatment.

Through a bundled payment model, the payer would collectively reimburse the providers involved, using a set price for the episode of care, which is usually based on historical costs.

  • Transparency will empower patients and employers — who share in the broader health-care bill as payers of rising insurance premiums and as taxpayers supporting Medicaid and Medicare — to hold healthcare providers accountable for pricing and allowing stakeholders to choose more cost-efficient care.

2. Increasing Access to Claims Data

Current Problem:
Despite paying nearly twice as much for healthcare than those in other developed countries— Americans are not getting superior treatment or leading longer, healthier lives as a result of what they pay. We need better data in this regard in order to make the system more efficient.

Within 180 Days:

  • Trump’s Executive order requires HHS, the Department of Defense and Department of Veteran Affairs to increase access to claims data from taxpayer-funded healthcare programs and group health plans for researchers, innovators, providers and entrepreneurs, in a manner that is consistent with applicable law and that ensures patient privacy and security.
  • Require of HHS to make a list of priority datasets that, if de-identified, could advance the policies set forth by the order, and will report to President Trump on proposed plans for future release of these priority datasets, as well as any barriers to their release.

Intent of the Order:
To facilitate the development of tools that empower patients to be better informed as they make decisions related to healthcare goods and services, and enable researchers and entrepreneurs to locate inefficiencies and opportunities for improvement (such as patterns of performance of medical procedures that are outside the recommended standards of care).

3. Surprise Medical Billing

Current Problem:
Nothing sours an employee on the company medical plan quicker than large unexplained medical bills following a serious health crisis. Despite attempts to stay in network when receiving healthcare, Americans are continuously fraught with large, unexplained medical bills particularly following a hospital stay or outpatient procedure like a colonoscopy.

Though complicated, a simple explanation of the events that trigger surprise medical bills, how to avoid them, and Arizona-specific legislation designed to protect employees from such bills can be found here.

Within 180 Days:
The order requires HHS to submit a report to President Trump identifying additional steps that the administration may take to address surprise medical billing.

Intent of the Order:
To protect American healthcare consumers from unexplained medical bills and hold providers more accountable for eliminating them altogether.

The Future for Employers

American employers will be the first to tell you that traditional, demand-side cost sharing tactics are no longer effective in controlling costs. As one of the largest stakeholders in the healthcare financing solution, employers:

  • are the largest single provider and purchaser of health insurance in the United States
  • cover over 150 million workers and their dependents
  • purchase 34% of all healthcare dispensed in the country.

Despite pushing deductibles as high as they can, communication campaigns focused on patient education, consumerism, disease management and prevention, alternate funding arrangements, limited networks, and wellness initiatives – employer premium costs have continued to sky rocket.

We need a new approach. Hopefully, holding healthcare providers accountable and demanding simplified price transparency will enable Congress, regulators and healthcare consumers to get a better grip on how prices are set so we can work together to bring them in line with other developed countries.