Hospitals sue Trump administration over price disclosure rule

A coalition of major hospital groups filed a lawsuit Wednesday to stop the Trump administration from requiring them to disclose the prices they privately negotiate with insurers.

The move comes less than three weeks after the administration issued a final price transparency rule that officials say will help reduce health care costs, one of President Donald Trump’s main promises as he heads into the 2020 campaign.

The hospital groups contend that the Centers for Medicare and Medicaid Services overstepped its authority in compelling hospitals to publicize these rates. Plus, they argue, the provision violates the First Amendment by mandating they reveal the rates “in a manner that will confuse patients and unduly burden hospitals.”

“CMS’ final rule fails to offer patients easy-to-understand information regarding their out-of-pocket obligations for care — so we feel obligated to contest the regulation,” said Chip Kahn, chief executive of the Federation of American Hospitals, which represents investor-owned hospitals. “We contend the agency exceeded its authority and should go back to the drawing board.”

The federation filed the suit along with the American Hospital Association, the Association of American Medical Colleges and the Children’s Hospital Association, as well as three hospitals, in the US District Court for the District of Columbia.

The rule, which stems from an executive order Trump issued this summer, requires hospitals to make public by 2021 the rates they negotiate with insurers and the amounts they are willing to accept in cash for an item or service. In addition, they must provide this information in an online, searchable way for 300 common services, such as X-rays, outpatient visits, Cesarean deliveries and lab tests. Hospitals that don’t comply will face a civil penalty of up to $300 a day.

When he announced the regulation last month, Health and Human Services Secretary Alex Azar said he believes it will survive any legal challenges from hospitals.

“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it,” Caitlin Oakley, an HHS spokeswoman, said Wednesday.

Addressing the argument that patients are more interested in what they actually have to pay, the administration also released last month a proposed rule that would require insurers to provide consumers with estimates of their out-of-pocket costs for all health care services through an online tool. Carriers would have to disclose their negotiated rates for in-network providers, as well as the allowed amounts paid for out-of-network providers.

Administration officials contend that greater price transparency will allow patients to shop for medical services, which in turn will lead to lower prices.

“The decades-long norm of price obscurity is just fine for those who get to set the prices with little accountability and reap the profits, but that stale and broken status quo is bleeding patients dry,” Seema Verma, the Centers for Medicare and Medicaid Services’ administrator, wrote in an op-ed in the Chicago Tribune on Wednesday. “The price transparency delivered by these rules will put downward pressure on prices and restore patients to their rightful place at the center of American health care.”

But many health policy experts doubt the rule will have much of an impact on prices, in part because patients typically don’t shop for health care services. Also, many areas of the country have one dominant hospital system, so consumers don’t have a lot of choice.

“It doesn’t matter if you know what the price is if you just have to pay that price regardless,” Tara O’Neill Hayes, deputy director of health care policy at the American Action Forum, a right-leaning think tank, said last month at a forum on lowering health care costs.