Hospitals lose lawsuit against HHS over price disclosure rule

Ayla Ellison - Print  |

Industry groups representing hospitals and health systems across the nation sued HHS last year, challenging a rule that requires hospitals to disclose the rates they negotiate with insurers beginning in 2021. On June 23, a federal judge granted HHS' motion for summary judgement.

Under a final rule issued in November, hospitals are required to disclose the standard charges, including payer-specific negotiated rates, for all services beginning next year. 

The American Hospital Association, the Association of American Medical Colleges, the Children's Hospital Association and the Federation of American Hospitals sued HHS in December, arguing the department lacks statutory authority to require public disclosure of individually negotiated rates between commercial insurers and hospitals. HHS argued its definition of standard charges is permissible under a 2010 law enacted to lower the cost of healthcare coverage.

Both sides filed motions for summary judgment, and Judge Carl Nichols with the U.S. District Court for the District of Columbia granted HHS' motion and denied the hospital groups' motion on June 23. 

In his 43-page decision, Mr. Nichols said HHS acknowledged and considered the arguments of provider organizations and payers when it issued the final rule and "did not act arbitrarily and capriciously in concluding that the final rule could have substantial benefits." 

In the decision, the judge highlighted the steps HHS took to address some of the concerns raised about the rule, including proposing a complementary rule that would require insurers to post data, such as negotiated rates, and delaying the effective date of the rule by a year. 

"In sum, CMS considered commenters' concerns, echoed here in plaintiffs' briefs, about the rule but determined that those concerns were not persuasive," reads the opinion. "By acknowledging conflicting data and articulating which information it found most convincing, the agency fulfilled its duty to examine the evidence before it and connect it to the final rule." 

The decision can be appealed. 

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