01 Jan Hospitals Lose Appeal to Block Transparency
Hospitals lose appeal to block CMS’ price transparency rule
A federal appeals court has ruled against hospital groups in their legal challenge to the CMS regulation that would require hospitals to make pricing information publicly available. The rule is set to take effect Jan. 1.
Despite hospital groups’ attempts to prevent its enforcement, the Centers for Medicare and Medicaid’s hospital price transparency rule will go into effect Jan. 1, as scheduled.
On Tuesday, a federal appeals court ruled against the hospital groups in the legal challenge they mounted to block the CMS regulation. The rule will require hospitals operating in the U.S. to make pricing information — including prices they negotiate with health insurers — publicly available.
Judge David Tatel, who filed the opinion for the U.S. Court of Appeals for the District of Columbia Circuit, wrote that one of the providers’ central arguments “miss the mark.” In oral arguments heard in October, the American Hospital Association — which filed the appeal along with several other hospital groups — said many rates negotiated with payers are “unknowable,” as they are determined only after the patient receives care and so cannot be disclosed beforehand.
But, Tatel wrote, the rule, “does not require hospitals to disclose all possible permutations of costs based on hypothetical additional care or any other variable factor. It simply requires disclosure of base rates for an item or service, not the adjusted or final payment that the hospital ultimately receives based on additional payment methodologies.”
Further, the groups argued against the rule’s requirement that hospitals provide pricing information both via a machine-readable list and a separate, consumer-friendly shoppable services list. Tatel and the other judges sided with HHS on this point as well, saying that the secretary can “require hospitals to display the information in multiple ways.”
The hospital groups filed the appeal after a federal judge ruled against them in a lawsuit they filed in December 2019. In the lawsuit, the groups claimed that the regulation was beyond the Department of Health and Humans Services’ authority and that disclosing price information would lead to higher costs. But U.S. District Judge Carl Nichols ruled in favor of the federal agency, granting summary judgment to the HHS secretary.
Just last week, the American Hospital Association, along with several other organizations, filed an emergency stay of enforcement motion to prevent the rule from being enforced in January. But the motion was dismissed.
In a statement posted to its website, the association said that though U.S. hospitals “support the goal of increasing price transparency” they are “disappointed in today’s decision.”
“Further, the decision to decline a stay in enforcement ignores the overwhelming burden of the pandemic on hospitals,” the group said.
The association reasserted its belief that disclosing privately negotiated rates will not help patients understand how much they will actually pay for treatment and that the disclosure will “accelerate anticompetitive behavior among commercial health insurers and hinder innovations in value-based care delivery.”
The association is also asking the incoming administration of President-elect Joe Biden to evaluate the rule and “exercise enforcement discretion for the duration of the public health emergency.”