Court Upholds Hospital Price Transparency Rule

On Tuesday, the United States Court of Appeals for the District of Columbia ruled that the Department of Health and Human Services may continue with the hospital price transparency rule on January 1. The American Hospital Association requested an injunction against the 2019 final rule that will require hospitals to make their standard charges for all items and services available to the public in a consumer-friendly format.

The American Hospital Association (AHA), along with other hospital groups, filed an emergency motion last Monday arguing that enforcing the rule would add to the enormous burden currently on the shoulders of the nation’s hospitals due to the surge in cases of the COVID-19 pandemic. From the emergency motion, via MedCity News:

Whatever the public’s interest in hospital transparency, it pales in comparison to the immediate public interest in an effective coronavirus response.

Penalties for noncompliance will be enforced through the Centers for Medicare and Medicaid Services (CMS). Initially, CMS will issue a warning for noncompliance and request corrective action. Subsequently, the agency can impose a penalty of $300 per day if the hospital does not submit an action plan or offer other compliance.

According to RevCycle Intelligence, CMS also plans to audit a sample of hospital websites for compliance beginning in January. Through the audits, the agency will issue warnings on violations and request corrective action if it constitutes a “material violation.” Hospitals will be able to appeal to CMS for any civil monetary penalty imposed under the rule, and appeals must be submitted within 30 days of issuance of the notice.

The federal court of appeals ruled against the hospital groups’, as the three-judge paned expressed heavy skepticism of the plaintiffs’ claims, reports Healthcare Dive. While the hospital lobby argued that the requirement is too much of a burden, they also argued that building a price list would be impossible. The AHA litigator told the judges that “certain prices are unknowable”, which provoked the judges into a rigorous line of questioning.

Judges Merrick Garland and David Tatel did not buy the argument of “unknowable” prices. In the opinion, Tatel said that the arguments “miss the mark” and the rule does not require hospitals to disclose all possible prices, just base rates that are negotiated with insurers.

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… As to consumer confusion, the rule recognizes such a possibility but nonetheless concludes that the disclosure scheme will benefit the ‘vast majority’ of consumers, especially because consumers are already exceptionally frustrated at the lack of publicly available data, and because the availability of the data will lead to more price transparency tools developed by third parties.

AHA General Counsel Melinda Hatton said that the AHA will review next steps, according to Inside Health Policy. AHA still believes that the disclosure of negotiated rates does not help patients understand what they will personally pay and that this rule will lead to widespread confusion.

We also believe it will accelerate anticompetitive behavior among commercial health insurers and hinder innovations in value-based care delivery. Lastly, the requirement imposes significant costs on care providers at a time when scare resources are needed to fight COVID-19 and save lives.

The AHA and other hospital groups will now turn to the incoming Biden administration for relief and revisions to the transparency rule.