Congress is currently working hard to hammer out a year-end healthcare deal. But the Trump administration can immediately take two price transparency administrative actions to reduce costs and improve affordability: Implement the Advanced Explanation of Benefits (AEOB) rule pursuant to the No Surprises Act and expand its forthcoming Department of Labor pharmacy benefit manager (PBM) transparency rule to all aspects of medical plans.
These actions can empower patients and employers to reduce the cost of care and coverage through competition, choice, and billing and payment accountability.
Congress passed the No Surprises Act at the end of 2020 on bipartisan lines to reduce surprise medical bills. One of the law’s most important provisions requires health insurers to provide patients with an AEOB. AEOBs give patients upfront, detailed price information about their treatment, including their out-of-pocket expenses, similar to what patients currently receive in the mail weeks after care. Unfortunately, the Biden administration sat on this provision after the law’s passage. Its implementation is overdue.
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By immediately enacting the AEOB rule, the Trump administration can give patients the upfront price information they need to protect themselves from overcharges and choose affordable care. They can spot wide price variations for the same care, even at the same hospital, and choose $300 MRIs instead of $3,000 scans and $1,200 colonoscopies rather than $12,000 ones.
AEOBs give power back to patients, restoring trust in the medical system, unleashing competition, and providing financial certainty. The vast majority of Americans support such price transparency — and want it immediately.
Approximately 181 million Americans receive health coverage through their employer or union. This form of health insurance is often overlooked in policy debates, even though average annual employer-sponsored family premiums have risen to $27,000. These runaway premiums increase inflation, suppress wages, and reduce business dynamism. Reports suggest premiums will increase by double-digits again next year.
By expanding its forthcoming Labor Department transparency rule, the Trump administration can help employers significantly reduce health plan costs, steer employees to the best care at the best prices, and fulfill their fiduciary duty.
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As originally designed, the administration’s effort shines a light on PBM compensation to give employers more insight into what’s driving prescription drug costs. This action is a good first step, but it doesn’t address the 85% of health plan costs attributable to medical services. Employers also need transparency into compensation of health insurance companies – not just their PBM subsidiaries – to see how they are making money in the dark.
Employers also need access to their full health claims to expose and eliminate insurance spread pricing. Under the status quo, employers are often forced to sign gag clauses that allow insurers to keep claims receipts hidden. No other industry operates this way.
By requiring not only full disclosure of PBM compensation but also compensation information and claims data from health plan insurers, administrators, and third parties, the Trump administration can bring transparency to all aspects of health plans. Employers can then eliminate overbilling and unnecessary insurance-owned middle players that drive up premiums. And they can redirect savings to higher wages, better benefits, more hiring, and business growth.
These two actions together, implementing the AEOB rule and expanding employer health plan transparency, will unleash the full power of free-market forces to lower costs and raise wages. They require no new legislation, no new bureaucracy, and no taxpayer money. They will give American healthcare consumers — patients, workers, businesses, and unions — the control they need to get the care they deserve at prices they can afford.
Photo by Alex Wong/Getty Images
Cynthia A. Fisher is Founder and Chairman of PatientRightsAdvocate.org, a nonprofit organization seeking healthcare price transparency, giving power to American consumers and employers to lower their costs of care and coverage through a functional marketplace and choice. She is a life sciences entrepreneur, independent investor, and corporate board director of The Boston Beer Company (SAM) and Easterly Government Properties, Inc. (DEA).
Cynthia is best known for her pioneering work as Founder and CEO of ViaCord, Inc., a leading umbilical cord blood stem cell banking service which she started in 1993. In 2000, she co-founded and was President of the cellular medicines company, ViaCell, Inc. (VIAC). Cynthia holds an MBA from Harvard Business School, as well as an Honorary Doctorate of Science and BS in Biophysics from Ursinus College.
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