Ruling Requires Transparency for Hospitals and Insurers

On June 23, a federal judge upheld the new mandate requiring hospitals to publish the secret rates they negotiate with health insurers. U.S. District Judge Carl Nichols stated “The agency’s rule is exacting, but the demands flow from the congressional determination about the role of price transparency in bringing down health care costs and the reality of hospital billing”.

As required by the Hospital Price Transparency final rule – effective Jan. 1, 2021 – hospitals will be required to post gross charges, payer-specific negotiated rates, the de-identified minimum and maximum negotiated rates, and the cash discount price for all items and services on a website in a machine-readable format. In addition, the final rule requires posting of information for 300 “shoppable” services in a consumer-friendly manner.

The Administration hopes that by forcing the health care industry to disclose pricing, healthcare costs will be driven down. Hospitals fear that this mandate will undermine negotiations between hospitals and health insurers, giving power to the more powerful players in the market. The fine for violating this policy will be up to $300 per day until the mandated policy is implemented.

The American Hospital Association (AHA) had sued to block the price transparency requirement. Although the ruling was a summary judgment, it can be appealed. The AHA had argued that forcing hospitals to publish their negotiated rates with insurers is a violation of the First Amendment and goes beyond the statutory intent of the Affordable Care Act.

AHA will appeal the decision and ask for the case to be reviewed quickly.