National News

Health Officials Assail ‘Pricing Schemes’ That Gouge Patients

Posted March 8, 2018 7:19 p.m. EST

WASHINGTON — Alex M. Azar II, the secretary of health and human services, said Thursday that doctors and hospitals should tell patients how much their care would cost before patients received treatment. And if they do not do so voluntarily, he said, the government may use its leverage to force them to disclose the information.

Azar, speaking to a conference of health insurance executives, said that such information would give patients more control over their health care. And that, he said, would advance one of the Trump administration’s top priorities: “the value-based transformation of our entire health care system.”

“You ought to have the right to know what a health care service will cost — and what it will really cost — before you get that service,” Azar said.

His speech — and similar remarks this week by other federal health officials — amounts to an experiment in jawboning by an administration viscerally opposed to new regulations. It is unclear what President Donald Trump will do if the exhortations fail to produce the desired results. Azar hinted, at a news briefing Thursday, that the administration’s policy preferences could be included in Medicare regulations and perhaps, if necessary, in legislative proposals.

He told a personal story to illustrate what he called the powerlessness of many consumers. Several years ago, he said, when he was living in Indiana, his doctor ordered a routine echocardiographic stress test, which is meant to show how well the heart works during physical activity.

Instead of receiving “a simple test in the room next door,” he said, he was sent to a hospital clinic, and as a result, “the sticker price on the test just jumped dramatically.”

When he asked how much the test would cost, he was told that the information was unavailable. He persisted, and eventually the manager of the clinic told him that the list price was $5,500.

“I knew that wasn’t the right answer,” Azar said. “The key piece of information was what my insurer would pay as a negotiated rate, or what I’d pay with cash. That information didn’t come easily either, but eventually I was told it would be $3,500.”

Then, he said, he found on a website that a typical price for the procedure, performed in a doctor’s office, was $550. The price mattered to him because, like growing numbers of people, he had a health plan with a high deductible.

Azar said little about expanding insurance coverage, the overarching goal of health policy under President Barack Obama. But he made clear that the Trump administration was seeking big changes in other ways.

“Putting the health care consumer in charge, letting them determine value, is a radical reorientation from the way that American health care has worked for the past century,” Azar said. “In fact, it will require some degree of federal intervention, perhaps even an uncomfortable degree.”

Azar, a former top executive at Eli Lilly and Co., the drugmaker, also complained that it was often impossible for consumers to know the true cost of prescription drugs.

“Your pharmacist typically cannot tell you the real price you’re going to pay for a drug, and therefore your out-of-pocket cost, until they actually create a claim,” Azar said.

“This administration is calling on not just doctors and hospitals, but also drug companies and pharmacies to become more transparent about pricing,” he said, and “if that doesn’t happen, we have plenty of levers to pull to push it along.”

Dr. Scott Gottlieb, the commissioner of the Food and Drug Administration, was even more pointed in remarks Wednesday at the same conference, held by the America’s Health Insurance Plans, the health insurance industry lobby.

He said that drug manufacturers, health insurance companies and middlemen known as pharmacy benefit managers were profiting from “pricing schemes” that drove up costs to consumers and delayed access to copycat versions of expensive biotechnology drugs.

The “complexity and opacity of these schemes” — “these Kabuki drug-pricing constructs” — are creating an “insidious barrier” to the development and marketing of lower-cost copies of complex biologic medicines made from living organisms, Gottlieb said.

And he denounced insurers for charging high copayments to cancer patients who needed these lifesaving treatments.

“What’s the point of a big copay on a costly cancer drug?” asked Gottlieb, himself a cancer survivor. “Is a patient really in a position to make an economically based decision? Is the copay going to discourage overutilization?"

Kara Kelber, a spokeswoman for Consumers Union, said: “It’s encouraging to hear administration officials address these issues head on with industry. But the proof is in the pudding. We hope this leads to actions that benefit consumers.”

Andrew M. Slavitt, a senior health official in the final years of the Obama administration, praised Gottlieb for highlighting what Slavitt called “the collusion to keep drug prices high.”

“I would argue it calls for more dramatic actions,” Slavitt wrote on Twitter. “But I give him great credit for laying bare the problem. Under Obama, I would have been proud to give this speech.”