Appeals court urged to overturn lower court ruling on negotiated rates

The federal appeals court in Washington, D.C., should overturn a lower court ruling upholding a Department of Health and Human Services final rule requiring hospitals to disclose the rates they agree to accept from insurers, the AHA told the court today, joined by the Association of American Medical Colleges, Children’s Hospital Association, Federation of American Hospitals and several member hospitals.

Calling the hospital groups’ legal challenge to the rule a “close call,” the lower court nevertheless upheld the rule as a reasonable statutory interpretation of Section 2718(e) of the 2010 Affordable Care Act by the agency under a legal theory announced in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984), which instructs a court to defer to such reasonable agency interpretation.

Responding to a brief from the government in support of the lower court’s ruling, the hospital groups said the rule clearly exceeds HHS’s statutory authority. 

“Even if Chevron applies—it does not—HHS’s new interpretation is impermissible,” they write. “The government does not dispute that HHS’s Rule implausibly calls thousands of different rates the ‘standard charge’ for each item or service, and would vest HHS with a hitherto undiscovered disclosure power. The government does not contest that HHS compels disclosure of rates that depend on care that patients receive, which hospitals cannot calculate in advance. Nor does the government dispute that HHS’s Rule radically surpasses what any State requires, or that HHS mistakenly rested the Rule’s projections of benefits and burdens on those inapposite state regimes. The Rule also transgresses the First Amendment’s restrictions on compelled speech and the [Administrative Procedure Act’s] bar on unreasoned agency action.”