Federal court rules against hospitals in HHS price transparency lawsuit

Today, United States District Judge Carl Nichols ruled in favor of the Trump Administration in a lawsuit filed by hospitals challenging federal transparency requirements surrounding negotiated rates between hospitals and insurers.

Specifically, the ruling upheld a Trump administration executive order directing the Secretary of Health and Human Services to require “hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services… in easy-to-understand formats so as to inform patients about actual prices.”

In December 2019, the American Hospital Association and other national organizations representing hospitals and health systems filed a federal lawsuit against the Administration, challenging the Centers for Medicare & Medicaid Services’ final rule mandating that hospitals disclose their privately negotiated rates with commercial health insurers.

 

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In their lawsuit, the American Hospital Association maintained that the administration did not have the legal authority to require the publication of negotiated prices.

Price negotiation between insurers and providers typically is not disclosed to patients until after services are delivered. The executive order is part of a broader push for price transparency which the Administration posits will lead to lower and more stable prices.

Judge Nichols wrote in his decision that the hospitals were “attacking transparency measures generally” to curtail price transparency and that hospitals “may be affected by market changes and need to respond to a market where consumers are more empowered.” That hospitals may need to adapt to a more consumer friendly market is not an indication of an unlawful rule, reasoned Nichols.

HHS Secretary Alex Azar offered a laudatory statement in response to the court’s decision:

With today’s win, we will continue delivering on the president’s promise to give patients easy access to health care prices. Especially when patients are seeking needed care during a public health emergency, it is more important than ever that they have ready access to the actual prices of health care services.”

The hospital association had no immediate comment on the decision, according to the New York Times.

Nichols also disputed the argument offered by the hospitals that the rules would create more administrative burden and actually increase prices:

Traditional economic analysis suggested to the agency that informed customers would put pressure on providers to lower costs and increase the quality of care.”

Increased price transparency rules consistently poll strongly.

This is an important ruling and a great step toward making the healthcare industry less opaque by requiring that they post the real prices for patients to see,” said David Balat, director of the Right on Healthcare initiative at the Texas Public Policy Foundation. “Nine in 10 Americans are in favor of seeing the real prices and this ruling is a great step in making healthcare more affordable for all.”