BACKGROUND PRESS CALL
BY SENIOR ADMINISTRATION OFFICIALS
ON THE EXECUTIVE ORDER ON IMPROVING
PRICE AND QUALITY TRANSPARENCY IN HEALTHCARE
Via Teleconference
9:04 A.M. EDT
MR. DEERE: Good morning, everyone. Thank you for joining us to discuss the President’s Executive Order on Improving Price and Quality Transparency in Healthcare. As you know, the President has referenced this several times over the last couple of months, so I know that we’re very excited to unveil it today.
The call is on the record for the opening portion; those comments will be from Secretary Alex Azar with HHS. Once his opening remarks are concluded, we will move to the Q&A portion, which will be on background, attributable to senior administration officials. During that portion, the Secretary will be joined by [senior administration official].
With that, I will turn it over to HHS Secretary Alex Azar.
SECRETARY AZAR: Thank you, Judd. Good morning everyone, and thank you for joining us to talk about what will go down as one of the most significant steps in the long history of American healthcare reform. President Trump has been very clear: He’s going to deliver American patients the affordability they need, the options and control that they want, and the quality they deserve. It’s one of his highest priorities as President.
What we’re announcing today will put American patients in control and address the fundamental drivers of high American healthcare costs in a way that no President has ever done before. The President knows the best way to lower costs in healthcare is to put patients in control by increasing choice and competition. And that’s been our policy vision from the beginning.
Patient empowerment, of course, requires transparency around price and quality. I’ve been saying that for well over a decade now, and I said it was a key piece of our agenda for better value in American healthcare soon after taking office last year. It can’t come a moment too soon because, every day, American patients are being taken advantage of by a system that hides critical information from them that they need to make decisions for them and their families.
Let me tell you a quick story. A few years ago, my doctor back in Indiana wanted me to do a routine heart exam -- an echocardio stress test. I figured this could occur within the scope of his practice, right there in his office, and that I would just walk next door to a different examining room. But, of course, he was connected to a major medical center. But instead of just walking next door, I was sent a few floors down, where I was told to start handing over all sorts of information to a receptionist as she typed away behind a screen. Soon enough, I had a plastic wristband slapped on me. And what I thought would be a relatively simple test in the room next door resulted in my being admitted to the hospital.
Now, I had a high-deductible plan, so I would be paying for this test out of pocket. As somebody who worked in healthcare, I also knew that the price of the test had just jumped dramatically by my receiving it within a hospital -- something that might never occur to most patients.
So I asked how much the test was going to cost -- a pretty obvious question. And I was told that they wouldn’t tell me. I persisted and I persisted and I persisted, and eventually the manager of the heart ward appeared and gave me the answer. The list price would be $5,500. But I knew that wasn’t the right answer either. The key piece of information was what my insurer would say as a negotiated rate -- or what I would pay with cash.
Eventually -- and that’s a very long “eventually” -- I was told that would be $3,500. Now, I happened to know there was a way to find the typical prices for such procedures, so I went online on my phone and looked up what it would have been if I received it outside of a hospital setting -- just in a doctor’s office -- and the answer was sort of what I suspected: $550.
So there I was -- the former Deputy Secretary of Health and Human Services -- and that is the kind of effort it took to find out the cost of a very standardized and routine procedure.
What if I had been a grandmother or a 20-something with a high-deductible health plan? This is the kind of experience that no American should ever have, and it’s the kind of thing President Trump is intent on making as rare as possible in American healthcare.
So let me lay out how the EO the President will sign today will help accomplish this. The executive order has five major policy components:
First, it directs HHS to issue a rule requiring hospitals to disclose -- in an easy-to-read, patient-friendly format -- prices that reflect what patients and insurers actually pay. So I wouldn’t have had to keep pressing when I was just trying to get a routine heart exam.
Second, the EO requires us to put forth a proposal to require healthcare providers and insurers to provide patients with information about the out-of-pocket costs they’ll face before they receive healthcare services. If I had that, I probably never would have walked down the hallway to get a wristband put on me in the first place.
Third, it calls for the administration to lay out a roadmap for consolidating quality measures across all federal healthcare programs, simplifying how we measure quality in order to better serve patients.
Fourth, it calls for the administration to dramatically expand access to de-identify healthcare claims data in a safe way that protects patient privacy, providing unprecedented data sets to support innovators and researchers in identifying opportunities to improve American healthcare.
Fifth, it directs the Department of the Treasury to expand consumers’ ability to take advantage of money-saving health savings accounts and other medical accounts, including by expanding the range of services for which HSA dollars can be used.
The EO also requires HHS to work with other departments to determine how we can take further regulatory steps to address surprise billing that will supplement Congress’s work, and examine other barriers to price transparency and shopability in healthcare.
And immense amount of work went into making this EO possible, so I want to thank our entire team from HHS, all the policy components at the White House and across the administration, including our colleagues at the Department of Treasury and Labor for making this possible.
This EO builds on the Choice and Competition report that HHS, the White House, Treasury, Labor, and the Federal Trade Commission produced last year. That report was, in particular, a tribute to the indefatigable work of Brian Blase of the National Economic Council, who is soon going to be departing the administration and should be very proud of the results he’s delivered.
Thanks to this team and the President’s vision, the Trump administration has also delivered huge improvements in other areas of healthcare too, from expanding alternatives to unaffordable Obamacare plans, to lowering prescription drug prices and out-of-pocket costs.
The President has a clear vision for American healthcare -- a vision that delivers Americans the affordability they need, the options and control they want, and the quality they deserve. That's the promise he's made to American patients, and today represents a historic step for delivering on that promise.
So, thank you for joining us today. And we'd now be happy to take some questions.
Q Thank you for doing this call. This is Susannah Luthi with Modern Healthcare. My question has to do with the first policy point. What level of detail are you going to be looking for on the prices? Will it be for each hospital, the rates that insurers have negotiated with those hospitals? Will it be a little more general? Just a little more detail on that point.
SENIOR ADMINISTRATION OFFICIAL: Yes. So the focus there is -- what we're doing there with regard to hospitals in that first element is the focus is negotiated rates, or common or shoppable items and services in an easy-to-understand customer-friendly format.
So we'll be putting out regulations to this effect; that's what the executive order will be calling for. Those details regarding the level of detail required will be forthcoming in the proposed rule-making. The EO does not specify the precise level of detail or individual versus aggregated information. That would be a part of the rule-making process.
Q Hi. This is Julia Appleby from Kaiser Health News. I wondered if you could just give a little more detail on that -- on whether it will be specific to an individual's insurance policy or if it will be more specific to, sort of, a region the patient is in. And then secondly, when would this -- when do your foresee this going actually into effect?
SENIOR ADMINISTRATION OFFICIAL: So, again, the executive order leaves room for us to work within the administration and work with those in the industry to discern the level of detail that is available and usable and consumer-friendly for patients and in a format that they can take advantage of.
And what the executive order will call for is a rule-making process -- because, of course, we have to follow the rule-making process, so there'll be a time deadline for me to propose a regulation. And then, of course, we'll go through the normal notice-and-comment rule-making process.
Q Hi, this is Rachel Roubein with Politico. Two quick questions. I just wanted to just kind of drill down and double check if the EO is going to direct the agencies to make the data available on the negotiated rates between hospitals, insurers, and whatever that looks like. Is that up in there, but those negotiated rates would be available in some form?
SENIOR ADMINISTRATION OFFICIAL: Hi. The executive order states that the proposed rule must make information based on negotiated rates to be publicly published. There are multiple ways that this could be accomplished, including the disclosure of very specific information. But those specifics will be determined in the rule-making process.
Q Hi. Yeah, Ricardo Alonso-Zaldivar with AP. And thank you for taking my question. And my question is: How do you address the concerns of some of the hospitals and insurers that the government is basically going to, kind of, force them to disclose proprietary information, which the government generally does not do? How are you going to deal with that?
SENIOR ADMINISTRATION OFFICIAL: Thanks, Ricardo, for asking that question. So, yeah, you hear some of that, but what I would say is: Every time anyone of us goes to a doctor or a hospital, within a couple weeks in our mailbox arrives an explanation of benefits. That explanation of benefits contains the list price for the procedure that you got, what the negotiated rate is between the insurance plan and the provider, and what your out of pocket is. And so that information is there. This is not some great state secret out there.
What we're saying is, you've got the right to know that information before you get a service -- at least an estimate of that information. I've been using the shorthand of an advanced EOB -- an advanced explanation of benefits -- instead of one that comes after the fact when it does you no darn good.
And the same with the hospital information. Getting that information available and out there in whatever form and at whatever level of detail. As my colleague mentioned, it could range from aggregated to individual. And that’s what the rule-making process is for, to actually consult and get input on the appropriate level of detail and format of that information.
But I just -- that information is out there. It just needs to be presented to patients in a way that -- at the right time, and the right place, and the right format, so that it actually can drive healthcare decision-making for them.
Q Hi, this is Margot Sanger-Katz from the New York Times. I was curious, still, about this item number one. Who will be writing the rules that will enable this to happen? I know that there was a request for information in the ONC rule earlier this year. Are you imagining that this will happen through that rule-making process, or through a CMS rule-making? Or could you just tell us a little bit about, sort of, who will be doing this process?
SENIOR ADMINISTRATION OFFICIAL: Yes. So, for the first element, which is the Hospital Disclosure of Information Based on Negotiated Rates, that would be a commission to the Secretary of Health and Human Services, which would be executed by CMS -- the Center for Medicare and Medicaid Services.
Q This is Tami Luhby with CNN. Thank you for holding this call. What about any disclosure of doctors' rates or other types of facilities? Is number one only affecting hospitals or will there be any other broader efforts?
SENIOR ADMINISTRATION OFFICIAL: The executive order includes that there should be information on the rates of employees of those hospitals, so that includes the professional services element of the care.
Q Hi, this is Stephanie Armour at the Wall Street Journal. I had two quick questions. One, I may have missed this at the top of the call, but it wasn’t clear to me whether this call is embargoed or not. And then, two, I also know there's an out-patient hospital rule that's likely, I think, by August. Could some of that also be tackled through that rule?
MR. DEERE: Yes. So, Stephanie, I apologize. That was my fault for not mentioning it. The call is embargoed -- the information is embargoed until the call's conclusion.
SENIOR ADMINISTRATION OFFICIAL: And, Stephanie, in terms of rule-making vehicles, the executive order is not specific to which vehicles we would use. Suffice to say, we'll use any and all regulatory vehicles that can accomplish the executive order's objectives as quickly as possible.
Q Hi, thanks for taking my question. I just want to get a little more information. I know you said that this will apply to hospital charges and, I guess, physician charges associated with that, but is there any thought of expanding it to non-physician hospital charges or other medical services that aren’t facility based?
SENIOR ADMINISTRATION OFFICIAL: So the core of the negotiated rate disclosed -- the information based on negotiated rates is related to hospitals. And part of that is based on the legal authorities that we have there of whom we can regulate.
And then the second element, which is the out-of-pocket advanced disclosure, would be a joint process of HHS, the Treasury Department, and the Labor Department, working with providers and insurance companies to ensure the timely disclosure of out-of-pocket information or patients, prior to services.
Q Hi, this is Jonathan Block from BioCentury. I noticed in the executive order that there wasn’t anything noted about drugs, which isn’t much of a surprise, considering that the rule on drug pricing transparency is going into effect this summer. I was curious that, given the lawsuit that was filed by several drug-makers just about 10 days ago -- and one of their complaints was that that rule would require that the list price and that you were talking about for hospitals here, that you would have to disclose out-of-pocket costs -- if there's any kind of discussion within the administration, given that lawsuit, to possibly amending the rule based on what that lawsuit -- some of the complaints that were brought about in it?
SENIOR ADMINISTRATION OFFICIAL: Well, the President has taken an incredible amount of action to try to bring transparency across the entire healthcare system, including with regard to drug pricing. He banned gag clauses that prevented pharmacists from being able to tell patients that they could get their drugs cheaper simply by paying for -- cash.
As you noted, on July 9th, pharmaceutical companies will be required to disclose the list prices of their drugs in their television ads. We have proposed a rule that would end the system of backdoor, concealed rebates and bring transparency to the negotiated discounts that the drug companies are currently giving, and make that information available to patients at the point of sale.
And we have finalized the rule requiring a real-time benefit tool that, in the doctor's office, the doctor would actually be able to pull up information on what a drug would cost under that patient's particular insurance plan, as well as their out-of-pocket spend that it would cost, and what the competing products would be so that they can make an informed decision at the point of prescribing, before they even go to the pharmacy.
So, on the drug front, we've actually been able to take considerable steps already to bring transparency to drug pricing. This is now, with this executive order, moving those efforts to bring price and quality transparency into the rest of the healthcare system.
Q One of the things that I've found, personally, when I've gone is that you might get a rate for your insurer, but that’s not necessarily your insurance plan with that insurer. So how can you get to the point where you require hospitals to provide specifics so it's not just one particular Aetna -- all Aetna plans -- but your particular Aetna plan?
SENIOR ADMINISTRATION OFFICIAL: So, with regard to the hospital disclosure of negotiated rates, those are details to be worked out in the regulatory process. Now, of course, the second element of what the executive order calls for -- which is for the insurers to provide you with your out-of-pocket information -- they do have that information of the particular plan, the employer plan or other type of plan that you happen to be under, and, in fact, can calculate that quite handily.
They just now -- they push the button now after you go in. What the executive order is calling for them to do is push the button and print prior to you going in. So that’s all very knowable information, readily disclosable. There just hasn’t been anyone pushing to make them do that until President Trump is now mandating that.
MR. DEERE: Again, operator, thank you for hosting us. And thank you to everybody for joining the call. Thank you to Secretary Azar and [senior administration official] for joining us as our briefers today.
A reminder that the Secretary's opening remarks were on the record. The Q&A portion was on background attributable to senior administration officials. And the information was embargoed until the call's conclusion.
Thank you all for joining us today.
END 9:27 A.M. EDT
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