Hospitals' challenge to publicly posting prices hinges on First Amendment defense

A legal challenge to the Trump administration's rule requiring hospitals to post prices online is testing the bounds of U.S. constitutional free speech, according to Bloomberg Law. 

Last November, CMS issued its final healthcare price transparency rule, which requires hospitals to disclose the rates they negotiate with insurers beginning in 2021. 

Hospitals are required to publicize the payer-specific negotiated rates of 300 "shoppable services," defined as those that can be scheduled directly and in advance by a consumer. Seventy of the services are mandated by CMS. Hospitals can decide the other 230 services they post online.

The American Hospital Association, which is leading the legal challenge, is using the First Amendment to try to block the rule from taking effect.

The association, which represents more than 5,000 hospitals and health systems nationwide, argues the rule is unconstitutional because it requires each hospital in the U.S. to publicize confidential pricing information.

The challengers argue that the rule would fail to directly advance the CMS goal of providing reliable information to patients about the cost of hospital services.

"The rates negotiated between hospitals and commercial health insurers do not reliably predict the patient's out-of-pocket costs, and there is no easy way to reverse-engineer one from the other to determine what the patient’s copayment and deductible will be, or even if the service is covered at all," the hospitals argue in their complaint.

In addition, the plaintiffs argue that the disclosure would eliminate their ability to negotiate pricing with insurers and stop health insurers from signing agreements to potentially lower costs.

But convincing a federal judge that the rule violates the First Amendment may be a challenge because similar pricing disclosures already are required in other industries, according to Bloomberg Law.

The Federal Trade Commission requires funeral homes to disclose prices, and the Security and Exchange Commission requires companies to list detailed financial information in initial public offerings. Banks also must publicize rates, terms and fees in their credit card agreements.

"Unless a judge thinks all of those are unconstitutional too, it’s hard for me to see how you would rule in favor of the hospitals," Ronald Krotoszynski, a constitutional law professor at the University of Alabama School of Law in Tuscaloosa, told Bloomberg Law.

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