Legal Alert

Executive Order Aims to Enhance Transparency in Health Care Costs and Quality

July 2, 2019

On June 24, 2019, President Trump signed Executive Order 13877, Improving Price and Quality Transparency in American Healthcare to Put Patients First. This is the President's third executive order affecting the health care industry. Executive Order 13813 issued in October 2017, set the regulatory agenda for Association Health Plans, Short-Term Limited-Duration Insurance, and Individual Coverage Health Reimbursement Arrangements (ICHRAs).

Executive Order 13877 aims to assist patients in making informed decisions about their health care by dismantling "opaque pricing structures." The Order emphasizes the instrumental role that access to information plays in fostering competition and equipping patients with adequate information to make informed choices based on cost and quality.

Although the Order does not make law, its provisions will set a significant part of the regulatory agenda for the rest of the year.

Informing Patients About Actual Prices

The Order instructs the Departments of Health and Human Services (HHS), Treasury, and Labor to promulgate regulations within 60 days requiring hospitals to publicly post and regularly update charges for services, supplies, and fees in a consumer-friendly format. The Order further directs the three agencies to propose rules that will require health care providers, health insurers, and self-funded health plans to provide information about expected out-of-pocket costs for patients before they receive care. The President's executive action also requires HHS, in consultation with the Attorney General and Federal Trade Commission, to report within 180 days on "the manners in which the Federal Government or the private sector are impeding health care price and quality transparency for patients" and to issue recommendations for eliminating these impediments.

Establishing a Health Quality Roadmap

The Order also tasks the Departments of HHS, Defense, and Veterans Affairs with developing a Health Quality Roadmap within 180 days to improve reporting of data and quality measures across various government health programs, as well as the Health Insurance Marketplace. The Roadmap will include strategies for "establishing, adopting, and publishing common quality measurements; aligning inpatient and outpatient measures; and eliminating low-value or counterproductive measures."

Increasing Access to Data to Make Health Care Information More Transparent and Useful to Patients

The Order directs the Departments of HHS, Treasury, Labor, Defense, and Veterans Affairs to increase access to de-identified health claims data—health information stripped of direct personal identifiers to preserve privacy. The Order contemplates that access to such data will assist researchers in identifying inefficiencies in the health care industry—such as "patterns of performance of medical procedures that are outside the recommended standards of care"—and motivate entrepreneurs to pursue opportunities for improvement.

Expanding Health Benefit Options

The Order expands the availability of two types of consumer-directed health care accounts.  First, the Order requires the Treasury Department to issue guidance within 120 days that will provide greater flexibility to individuals with chronic conditions to qualify for contributions to a health savings account; which are available only if the individual has coverage under a high deductible health plan (HDHP).  This guidance is to allow the HDHP to cover low-cost preventive care before the deductible needs to be met for these individuals.  Second, the Order directs the Treasury Department to issue guidance within 180 days that increases the amount that individuals may carry over from the unused balance of a health flexible spending arrangement from one year to the next.  That amount is currently limited to $500.

The Order also requires the Treasury to consider regulations that would expand the definition of “eligible medical expenses” under section 213(d) of the Internal Revenue Code to include direct primary care arrangements and health care ministries.

Addressing Surprise Medical Billing

The Order requires HHS to submit to the President a report on steps the Administration can take to implement measures to reduce surprise medical billing in line with principles that the President stated in remarks he made earlier this spring.  This issue is already the subject of potential federal legislation in Congress and is a topic that state legislatures have been addressing as well.


Ballard Spahr's Health Care and Employee Benefits and Executive Compensation Groups advise providers and health plan sponsors on compliance with the full range of laws and regulations that have an impact on the industry.


Copyright © 2019 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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