Healthcare Organizations Sue Administration over Hospital Transparency Final Rule

The American Hospital Association and three other national organizations representing hospitals and health systems filed a lawsuit against the federal government, challenging the Nov. 15 final rule that requires hospitals to disclose their payer-specific negotiated payment rates. The associations are joined in the lawsuit by three hospital plaintiffs in Nebraska, Missouri and California.

The Centers for Medicare & Medicaid Services (CMS) recently released two major transparency policies for hospital and insurers. In the final rule, hospitals will be required to make their “standard charges” public in a machine-readable file and in a consumer-friendly display of 300 shoppable services beginning Jan. 1, 2021. In a separate proposed rule, insurers would be required to give consumers real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services, through an online tool. They must also disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers.

The lawsuit was filed after the rule was finalized despite offers from the hospital community to work with the Trump administration to find alternative solutions that would allow hospitals to provide patients with meaningful information, particularly about their out-of-pocket costs. Key issues of the lawsuit are:

• A provision that mandates public disclosure of individually negotiated rates between commercial insurers and hospitals. The lawsuit asks the court for relief on the basis that the U.S. Department of Health and Human Services lacks statutory authority to require and enforce this provision.
• An argument that the provision violates the First Amendment by compelling the public disclosure of individual rates negotiated between hospitals and insurers in a manner that will confuse patients and unduly burden hospitals.​

The price transparency rules become effective on Jan. 1, 2021, in the event the lawsuit is unsuccessful.