Breaking Down the New Executive Order on Healthcare Price Transparency

In a video interview with Pharma Commerce, Chris O’Dell, Turquoise Health’s SVP of market solutions, describes how the recent executive order on healthcare price transparency aims to make pricing in the healthcare industry more accessible and understandable for patients. This initiative is a continuation of efforts by both the Trump and Biden administrations, with the goal of improving transparency around hospital and payer reimbursement rates. The central idea is to require all hospitals and insurance companies to publicly disclose their contractual reimbursement rates, meaning patients will have clearer insights into what insurers pay hospitals for services.

Historically, these prices were not transparent, making it difficult for patients to understand the actual costs of healthcare. While earlier laws introduced in 2019 improved pricing transparency, there have been enforcement challenges. The new executive order seeks to address these issues by ensuring hospitals and payers comply with transparency requirements. A key update in the order is the inclusion of prescription drug prices, which had previously been excluded from transparency rules.

The broader impact of this order is to make healthcare pricing as transparent and predictable as other consumer services, like booking a flight or a haircut. Although the system is not fully realized yet, this executive order lays the foundation for a future where patients can easily access upfront pricing before seeking healthcare services. This transparency is expected to simplify the decision-making process for patients, ultimately fostering a more informed and competitive healthcare environment.

O’Dell also comments on the biggest challenges healthcare organizations currently face in terms of price transparency; where the healthcare industry currently stand in terms of compliance with price transparency regulations; specific strategies Turquoise Health provides in order to help healthcare providers navigate and meet the new price transparency requirements; and much more.

A transcript of his conversation with PC can be found below.

PC: Can you explain the key provisions of the recently released executive order on healthcare price transparency and how it will impact the healthcare industry?

O’Dell: These executive orders are about price transparency, and this is not a new concept for the Trump administration or for the Biden administration for that matter. This happens to be one of the few bipartisan things perhaps that's out there. In essence, what they want to do is make all hospitals and all payers make all of their contractual reimbursement rates public. Those are complicated terms if you're not in the industry, but it basically just means, what is your insurer, as a patient, pay to the hospital for the service that you received? As wild as this sounds, until these price transparency laws were out, none of that ever existed.

That was all a guessing game, and no one had any visibility into it. Over the course of the last four years, since the first version of these laws came out in 2019, we've seen a lot better prices, and we've seen a lot better data on these—what does the payer pay to the hospital?

Why are we talking today? Why does this new executive order even need to happen? It's because first they feel that the laws have not been enforced enough. They're saying, these are good laws, but we need to really make sure that hospitals and payers are doing this, and we're going to enforce it if they're not doing it. The second thing that comes through is drug prices. Hospitals and insurance companies had to make all their rates available, but somehow, the pharmacy benefit drugs, or prescription drugs—as they reference in this executive order—squeaked away and didn't have to comply with the regulations.

They're coming back and saying, we're going to enforce and we're going to make sure that drug prices are visible. What does this mean for the whole healthcare industry? I actually agree with what I think the government believes here, which is that it makes it easier for a patient to understand what they're going to pay for healthcare services before they go in. They use this term of “guaranteed upfront prices,” and that's their government speak for saying it's as easy to go get healthcare services and know what you're going to pay as it is to book a flight or go get a haircut or whatever example you want to use—that's what they're going for. We are not there yet, but these are the building blocks and foundation that they're using to get there.