Hospitals lose appeal in price transparency case

An appeals court rejected hospitals' challenge of a rule that requires hospitals to disclose the rates they negotiate with insurers beginning in 2021.

On Dec. 29, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the district court's grant of summary judgment to HHS. 

Under the final rule issued in November 2019, hospitals are required to disclose the standard charges, including payer-specific negotiated rates, for 300 services beginning Jan. 1. Seventy of the services are stipulated in the final rule. Hospitals can choose the other 230 services they post online. Hospitals that fail to publish the negotiated rates online could be fined up to $300 per day.

The American Hospital Association, Association of American Medical Colleges, Children's Hospital Association and the Federation of American Hospitals sued HHS in December 2019, arguing the department lacks statutory authority to require public disclosure of individually negotiated rates between commercial insurers and hospitals. HHS argued its definition of standard charges is permissible under a 2010 law enacted to lower the cost of healthcare coverage.

Both sides filed motions for summary judgment, and Judge Carl Nichols with the U.S. District Court for the District of Columbia granted HHS' motion and denied the hospital groups' motion on June 23. 

The AHA announced June 27 that it was appealing the decision. On appeal, the trade groups argued that CMS unlawfully expanded the definition of "standard charges" that hospitals must disclose under a provision in the ACA to include negotiated rates.

In response to the appeals court's Dec. 29 decision, the American Hospital Association said it 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."

The AHA said it has urged the incoming Biden administration to review the rule. The association added that it is reviewing the appeals court's decision to determine next steps. 

Ayla Ellison and Alia Paavola contributed to this article.

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