The American Hospital Association and several other national hospital associations have moved ahead, as they had announced in November that they would, and are suing the Department of Health and Human Services (HHS) over a pricing transparency rule that would otherwise go into effect in 2021.
As The New York Times reported on Wednesday, “The nation’s hospital groups sued the Trump administration on Wednesday over a new federal rule that would require them to disclose the discounted prices they give insurers for all sorts of procedures. The hospitals, including the American Hospital Association, argued in a lawsuit filed in United States District Court in Washington that the new rule ‘is unlawful, several times over.’ They argued that the administration exceeded its legal authority in issuing the rule last month as part of its efforts to make the health care system much more transparent to patients. The lawsuit,” the Times’s Reed Abelson wrote, “contends the requirement to disclose their private negotiations with insurers violates their First Amendment rights. The administration wanted the disclosure rule, which would go into effect in 2021, to allow patients to better shop for deals on a range of services, from MRIs to hip replacements.”
The lawsuit was filed in U.S. District Court for the District of Columbia; the associations involved are the American Hospital Association, the Association of American Medical Colleges, the Federation of American Hospitals, and the National Association of Children’s Hospitals. Those national associations are joined by the Blair, Neb.-based Memorial Community Hospital and Health System; the Mission Hills, Calif.-based Providence Health System-Southern California/Providence Holy Cross Medical Center, and Bothwell Regional Health Center in Sedalia, Mo.
At the outset of the text of the lawsuit, the associations and hospitals state that “America’s hospitals and health systems are committed to providing patients with the financial information they need to make informed decisions about their healthcare. That is the out-of-pocket amounts patients will be expected to pay for that care, recognizing that each patient’s circumstances will be differently affected by numerous variables in her health insurance coverage. Even providing out-of-pocket information to patients is challenging, however; it requires a number of different stakeholders, including commercial health insurers, to work with hospitals to develop a turnkey technology to provide real-time accurate estimates. And while there is no actual statutory basis for the federal government to require hospital disclosure of out-of-pocket costs, the hospital field has repeatedly urged CMS [the Centers for Medicare & Medicaid Services] to bring together on a voluntary basis the various stakeholders needed in order to develop an effective means to provide all patients with information on out-of-pocket costs. Instead, CMS promulgated a Final Rule requiring that hospitals post on the internet a file containing five types of pricing information for every item and service they provide.”
The associations and hospitals assert that “The Final Rule requires each hospital in the nation to publicize on its website a huge quantify of confidential pricing information reflecting individually negotiated contract terms with all third-party payers, including all private commercial health insurers, with which the hospital contracts. The Final Rule is unlawful, several times over,” the plaintiffs claim. “First, it exceeds the agency’s statutory authority”—and the complain goes on to detail the fact that negotiated charges are not standardized in any way. “The Final Rule also runs afoul of the First Amendment, because it mandates speech in a manner that fails to directly advance a substantial government interest, let alone in a narrowly tailored way. Again, Plaintiffs fully endorse the agency’s stated goals of increasing information given to patients relating to their costs of hospital services, and putting consumers ‘at the centers of their healthcare.’ But the Final Rule frustrates those goals. When a patient chooses a hospital, what she wants to know is her out-of-pocket costs, not an insurer’s ‘negotiated charges.’”
The Times’s Abelson quoted HHS spokesperson Caitlin Oakley as saying in an emailed statement that “Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it. President Trump and Secretary Azar are committed to providing patients the information they need to make their own informed health care decisions and will continue to fight for transparency in America’s health care system,” Oakley told the Times.
Abelson added in her report that, “While the administration is already requiring hospitals to post some of their list prices, the public outcry over surprise medical bills and high out-of-pocket costs led the administration to seek even more detail on rates. Patients have long complained that they are completely in the dark about what a doctor’s visit or surgery will cost until after they receive the bill. Knee surgery, for example, can cost thousands of dollars more at one hospital than at another in the same region.”
The lawsuit follows up on the associations’ announcement back on November 18 that they would sue over the HHS rule.
