Health-Costs Transparency Rule for Hospitals Upheld on Appeal

The hospital trade group appealed, arguing that the rule compelling the hospitals to publish their negotiated rates with insurers violated the First Amendment and went beyond the statutory intent of the Affordable Care Act.

On Tuesday, a panel for the U.S. Circuit Court of Appeals in the District of Columbia unanimously upheld the district court’s ruling.

The decision not only “fits comfortably within existing First Amendment precedent,” but also is “not intended to expand existing First Amendment doctrine or to otherwise affect traditional or ordinary economic regulation of commercial activity,” they wrote.

Chief Judge Merrick Garland, who heard the case alongside two other judges, didn’t participate in the final disposition of the case. Mr. Garland is among those being considered to become President-elect Joe Biden’s attorney general, The Wall Street Journal has reported.

In a tweet Tuesday, Health and Human Services Secretary Alex Azar called the court’s ruling a “big win for American patients.”

Melinda Hatton, general counsel of the American Hospital Association, expressed disappointment at the ruling.

“The AHA continues to believe that the disclosure of privately negotiated rates does nothing to help patients understand what they will actually pay for treatment and will create widespread confusion for them,” she said. The organization was reviewing the decision to determine any next steps, she added.

The rule, first proposed in July 2019, could upend the $1 trillion hospital industry by unveiling rates long guarded as trade secrets.

It requires hospitals to publicize the rates they negotiate with individual insurers for all services, including drugs, supplies, facility fees and care by doctors who work for the facility. It is scheduled to take effect Jan. 1, 2021, with hospitals facing fines of up to $300 a day if they don’t disclose negotiated rates.

The requirements would cover the more than 6,000 hospitals that accept Medicare, the government health program for people age 65 and older.

The initiative is part of Trump-administration efforts to shift from rolling back the Affordable Care Act and instead put its own stamp on health care. Central to the strategy is the notion that more price transparency would inject greater competition into the market and lower costs.

The administration estimated the rule would cost hospitals more than $23 million annually in 2016 dollars. Annual costs range from $38.7 million to $39.4 million in 2019 dollars, according to the rule.

Hospital groups say it will be costly for them to prepare the information required to comply with the new rules. Doing so, they said in their lawsuit, would necessitate spreadsheets with hundreds of thousands of columns, so large that they could crash most standard computer systems.

Write to Michelle Hackman at [email protected]