- In the first round of oral arguments in their lawsuit against HHS over a rule requiring hospitals to reveal the secret rates they negotiate with insurers for services, hospital groups argued the requirement exceeds the government’s authority and violates the First Amendment by compelling hospitals to publicly post confidential and proprietary information.
- The American Hospital Association, along with other industry groups and health systems that brought the lawsuit, argued in the U.S. District Court for the District of Columbia on Thursday that medical bills aren’t considered commercial speech and don’t fall under the same regulations that traditional advertisements, flyers and other forms of commercial speech offering or promoting services do.
- “There’s not another market that looks like the market for hospital services,” said U.S. Department of Justice Attorney Michael Baer, who was representing HHS. A majority of patients final bills’ include the negotiated rate, information that should be available to patients, acting as consumers, prior to receiving care, he said.
Thursday’s hearing was the first step in what’s likely to be a drawn out legal fight. Negotiated rates between hospitals and insurers have long been private, and hospitals want to keep it that way.
When HHS passed the final price transparency rule last year, the hospital groups filed a lawsuit in December, warning that requiring disclosure of negotiated rates will confuse patients, overwhelm hospitals and thwart competition. The rule would go into effect Jan. 1, 2021.
According to the lawsuit, the rule creates undue burden on hospitals and health systems, which can have more than 100 contracts with insurers. There can even be multiple contracts with an individual carrier to account for the various product lines, including Medicare Advantage, HMO or PPO.
The rule would require various pricing information, including gross charges, payer-specific rates, minimum and maximum negotiated charges and the amount the hospital is willing to accept in cash from a patient.
Some payers and employer groups have also protested the new rule, calling it wrong-headed.
When the rule initially passed last year, HHS argued that patients already see this pricing data when they receive their explanation of benefits, pushing back against the idea that it’s proprietary business information. They said this information needs to come before a procedure, not after.
HHS maintains that the rule is intended to give patients better access to payment information so they can make informed decisions as consumers.
“Patients deserve to know how much it’s going to cost when they get hospital care,” Baer said. “They deserve to know before they open a medical bill or before they choose where they want to receive care.”