Man looking at wall of questionsA basic problem with Trump's order on price transparency is that itis too vague, giving providers considerable leeway in how and whatto report. (Image: Shutterstock)

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President Trump's June executive order mandating healthcare providersto increase price transparency tapped into a popular thread inAmerican politics. But whether Trump's two-part plan to bringpricing into the open will actually result in lower overallspending on health services is dependent upon so many variablesthat its true impact will not be felt for years.

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Or so says Anna D. Sinaiko, MPP, PhD, Department of HealthPolicy and Management, Harvard T.H. Chan School of Public Health,author of a recent analysis of the executive order published inthe Journal of the American Medical Association.

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Related: Transparency puts the consumer back into healthcare consumerism

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Sinaiko notes that the order has two components and twoobjectives. The components: Hospitals must post "actual paidamounts, per medical service, based on negotiated rates," andclinicians, health insurers, and self-insured group health plansmust offer patients out-of-pocket estimates ahead of treatment. Theobjectives: minimize "surprise billing" while creating "pricetransparency much more broadly."

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It is the latter objective that she focuses on. A basic problemwith the order is that it is too vague, giving providersconsiderable leeway in how and what to report. For instance, shesays, will hospitals be required to post average amounts paid overmultiple health plans, or costs per plan? The outcomes could varywidely depending upon which one prevails.

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Then there's the large-market/small-market situation. In a smallmarket where few competitors exist, will transparency have anyeffect on what a provider decides to charge? Or how about theimpact of market consolidation on pricing? Here, she basicallyforecasts price collusion among major players. She says: "What isunknown and critical to monitor is whether in markets with a fewlarge health systems with substantial market power, market-wideprice transparency could facilitate coordination or otheranti-competitive behavior such that prices increase."

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Quality of care could also be lost in the transparency shuffle,especially in regions where competition is weak or very largeproviders can establish high base prices. All too frequently, shesays, the cost of services has little to do with the quality of theservices provided.

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"Another reason that transparency might not lead to a change inprices is that current price variation across hospitals does notreflect differences in health care quality (as economic theorywould predict), but rather the balance of market power between theparties during negotiations."

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There's yet another factor that could undermine transparencyefforts: consumer behavior. As she notes, many studieshave found that, when consumers have price transparency tools attheir disposal, 1) they don't use them very often and 2) even whenthey do, they often don't make the less expensive (or even higherquality of care) choice.

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"It seems unlikely that patients would use price informationmade available under the new executive order any differently thanthey have used the same information already available throughhealth plans and employers. Thus, expectations that pricetransparency through this executive order will lead patients tobegin to shop for their health care based on price are notsupported by current evidence," she says.

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She sums up her analysis on a note at once hopeful andskeptical.

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"The administration's executive order should help to broadenprice transparency well beyond information that has previously beenavailable. Experience suggests that providing personalized priceinformation to patients to reward higher-value clinicians rarelychanges behavior. It remains to be seen how far greater pricetransparency will affect the hospital and physician markets.Additionally, purchasers, policymakers, journalists, or otherscould act as superusers of the data to foster greater competitionand put downward pressure on prices through naming and shaming. Itwill be critical to watch all these groups to understand the fullinfluence of market-wide price transparency on the US health caresystem."

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Dan Cook

Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.