Hospital Groups Sue To Overturn Price Transparency Rule

A coalition of major hospital groups is suing to overturn a new federal rule requiring them to disclose the prices they privately negotiate with insurers. The Federation of American Hospitals, which represents investor-owned hospitals, filed the lawsuit in the U.S. District Court for the District of Columbia along with the American Hospital Association, the Association of American Medical Colleges, the Children’s Hospital Association, and three hospitals. The groups are asking for an expedited decision, saying hospitals could otherwise spend needless time and resources preparing for a rule that may be invalidated by the court.

The rule stems from an executive order President Donald Trump issued this summer to help reduce health care costs, one of Trump’s main promises as he heads into the 2020 campaign. The rule requires hospitals to publicly publish the rates they negotiate with insurers and the amounts they are willing to accept in cash for an item or service. This information must be provided in an online, searchable way for 300 common services, including X-rays, outpatient visits, Cesarean deliveries, and lab tests. Hospitals that don’t comply by 2021 will face a civil penalty of up to $300 a day.

Almost immediately after the government announced the rule, hospitals threatened legal action. The hospital groups now contend that the Centers for Medicare and Medicaid Services overstepped its authority with the price transparency rule. They say forcing the hospitals to publish their negotiated rates with insurers violates the First Amendment and goes beyond the statutory intent of the Affordable Care Act. The estimated cost to hospitals to follow the rule is between $38.7 million to $39.4 million.

Health and Human Services Secretary Alex Azar said last month he believes the regulation will survive any legal challenges from hospitals. He has lauded the new rule, calling it “a more significant improvement to American health care markets than any other single thing the Trump administration has done.”