Federal judge sides with HHS on hospital price transparency rule

The American Hospital Association plans to appeal the decision, which may affect the rule’s January 2021 implementation schedule.

By Emily Payne | June 24, 2020 at 09:39 AM

The Trump administration has notched a win in its efforts to increase health care transparency. On Tuesday, a federal judge ruled in its favor in a lawsuit filed in December by the American Hospital Association attempting to block the implementation of a rule requiring hospitals to disclose their negotiated prices.

“American patients deserve to be in control of their health care,” HHS Secretary Alex Azar said in a statement. “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.”

In his ruling, District Judge Carl Nichols rejected the AHA’s argument that the rule was “arbitrary and capricious.” He also gave careful consideration to the language used in the rule, specifically whether it was within the scope of the HHS to require disclosure of negotiated rates or if they should be limited to requiring only chargemaster rates. The former, the AHA argued, was a violation of their First Amendment rights.

“It is undisputed that chargemaster rates are not the amounts paid on behalf of 90% of hospitals’ patients, and thus it is hard to see how they can be considered usual, common or customary,” Nichols wrote.

“Hospitals may be affected by market changes and need to respond to a market where consumers are more empowered, but the possibility that the nature of their negotiations with insurers might change is too attenuated from the compelled disclosure to make the Rule unlawful,” he added.

The AHA plans to appeal the ruling, which may affect the rule’s January 2021 implementation schedule. Referencing the current COVID-19 pandemic, Melinda Hutton, general counsel for the AHA, also noted that the rule “imposes significant burdens on hospitals at a time when resources are stretched thin and need to be devoted to patient care.”

Emily Payne is managing editor at BenefitsPRO. A Wisconsin native, she spent the past eight years writing and editing for various athletic and fitness publications. She holds an English degree and Business certificate from the University of Wisconsin.

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