Health Care Price Transparency, Part D Premiums, Tracking Medicaid Hospital SDPs, and Upcoming Events

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Requiring Health Care Price Information

On Monday, the Trump administration finalized important improvements to the Transparency in Coverage rules, making health care price data more useful while reducing unnecessary reporting burdens. The changes build on the price transparency requirements established during President Trump’s first term.

In September 2019, a few months after leaving the National Economic Council, I authored a Galen Institute report explaining four ways upfront health care prices could help Americans:

1. Helping consumers shop for better value;
2. Enabling employers to adopt benefit designs, such as reference pricing, that can reduce spending without compromising outcomes;
3. Helping employers assess whether the insurers administering their plans are negotiating competitive rates; and
4. Exposing outrageously high hospital and insurer prices to public scrutiny.

Government-led price transparency efforts are an important first step. The original rules required insurers and health plans to disclose negotiated provider rates. But the resulting machine-readable files became enormous and difficult to use, often filled with duplicate data and “ghost rates” for services providers do not furnish. Publishing mountains of unusable data does little to help patients or employers find better value.

Monday’s rule from the Departments of Health and Human Services, Labor, and the Treasury includes key changes that should yield more useful information.

• The rule generally requires plans to report in-network rates by provider network, rather than duplicating the same information for each individual plan, and to exclude rates for services inconsistent with a provider’s specialty.
• The rule requires plans to provide more contextual information and use more standardized reporting.
• The rule provides relief to plans by requiring updates to in-network and out-of-network pricing files quarterly, rather than monthly. The federal departments estimate the changes will save plans and insurers about $175 million annually beginning in the second year.
• The rule requires plans to make pricing files easier to locate online.
• The rule requires plans to provide personalized cost-sharing information over the phone upon request.
• The rule requires plans to attest that their pricing data are true, accurate, and complete and identify a responsible senior official.

The administration is also putting hospitals on notice. The Federal Trade Commission sent warning letters to 24 of the nation’s largest health care services companies, reminding them that failing to provide timely, accurate, and complete pricing information can constitute an unfair or deceptive practice. Disclosures may mislead patients when they omit physician or facility fees or cover only part of the expected course of care.

The administration is moving ahead with the prescription drug transparency requirement included in the original 2020 rule. The government plans to begin developing the reporting format in November, finalize it around May 2027, and have plans publish files beginning in December 2027, with monthly updates thereafter. These files will disclose negotiated rates and historical net drug prices.

Patients should know what care will cost before receiving it. More usable pricing data and stronger accountability are commonsense steps toward helping patients and employers make informed decisions and encouraging competition on price and value. The ultimate goal is not just to make inflated prices more transparent, but to ensure prices are formed more often by market processes­—the same processes which have led to dramatic price reductions in other markets.

Part D’s Flat Premium Headline Masks Rising Costs and Fewer Choices

CMS projects that average premiums for stand-alone Medicare Part D plans will rise by less than $1 a month in 2027, to $36. But a new Prognosis by Boris Vabson shows why that reassuring headline obscures growing costs.

The projected monthly cost of the basic Part D benefit is rising 25 percent, to $369 per enrollee. Federal costs are projected to increase even faster—28 percent—as taxpayers finance a growing share of the benefit. The Inflation Reduction Act’s cap on base premium growth shifts more of the rising costs to the federal government.

The premium headline also depends on CMS’s expectation that many enrollees will switch to cheaper plans. For enrollees who remain in their current plans, average monthly premiums rise roughly 50 percent, from $33 to $49. Switching can require accepting higher deductibles or less favorable drug coverage.

Meanwhile, moderately priced options are disappearing. The number of plans charging $50 to $100 a month fell from 95 to 29, while total offerings declined from 367 to 323. The middle ground is shrinking between inexpensive plans with more limited drug coverage and costly plans with broader coverage.

Boris explains how the IRA’s benefit redesign contributed to these problems by increasing demand and limiting plans’ flexibility. Policymakers should address those incentives and restore room for choice and competition rather than merely shifting rising costs to taxpayers.

Medicaid State-Directed Hospital Payments Overwhelmingly Subsidize Non-Rural Providers

States often combine provider taxes with state-directed payments to draw down more federal Medicaid money and raise Medicaid payments well in excess of what Medicare pays. Hospital lobbyists have argued that the One Big Beautiful Bill’s reforms to Medicaid provider taxes and state-directed payments will devastate rural hospitals. We have already disputed these claims with evidence multiple times. Our new Paragon PIC finds that rural providers accounted for a very small share of scheduled payments under two major hospital programs in Texas and Arizona in 2025.

Using a common federal definition of rural hospitals, our analysis finds that rural providers accounted for just 3.2 percent of the $6.05 billion in scheduled payments under Texas’s statewide hospital payment program and 8.3 percent of the $3.03 billion under Arizona’s major hospital payment initiative. In both programs, more than 90 percent of the scheduled dollars went to non-rural hospitals.

 

These figures cover the selected programs, rather than every hospital payment in either state. They describe scheduled gross allocations, rather than final receipts or hospitals’ net gains after financing contributions.

The findings challenge the portrayal of these programs as providing large-scale support to rural hospitals. Policymakers should scrutinize who benefits from those arrangements and keep Medicaid focused on the vulnerable people it is intended to serve.