Legal Insights and Perspectives for the Healthcare Industry

In what has become the new “normal” in Washington, DC, these days, hospitals and their associations filed a lawsuit today against the US Secretary of Health and Human Services (Secretary) challenging the recent Final Rule issued by the Centers for Medicare and Medicaid Services (CMS) on November 27, 2019, addressing hospital pricing disclosures.

In its complaint, the American Hospital Association, joined by the Association of American Medical Colleges, the Federation of American Hospitals, the National Association of Children’s Hospitals, Inc. (d/b/a Children’s Hospital Association), and three representative hospitals in Missouri, California, and Nebraska (collectively, Plaintiffs), argue that the Secretary issued a Final Rule that (1) is unlawful and in excess of his statutory authority; (2) is a violation of the First Amendment by unlawfully compelling speech; and (3) is arbitrary and capricious, an abuse of discretion, and contrary to law, citing the Administrative Procedures Act (APA).

Price transparency rules impacting hospitals, health plans and third-party payers released by the Trump administration promise to substantially change how health plans, consumers, and providers will interact over the coming years. In this LawFlash, our healthcare industry team unpacks the final rule requiring hospitals to make standard charges public and the proposed transparency in coverage rule requiring group health plans and health insurance issuers to disclose negotiated rates with providers and out-of-network estimates for consumers. Across the industry as a whole, plans and providers alike will have to undertake additional costs to update their current programs, technology, and web pages to comply with the price transparency rules and take on or train personnel to maintain that programming and technology.

Read the LawFlash >

US President Donald Trump issued the Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First on June 24, another in a long line of recent executive and legislative branch efforts to address the issue of healthcare pricing and the apparent “black box” nature of those prices to the average consumer. The prevalence of health savings accounts (HSAs), high-deductible health plans, and narrow insurance networks has exposed the underbelly of healthcare pricing to the American consumer. Disputes among providers and insurers that land in the laps of patients and consumers have reached a fever pitch. The executive order is a response to the call to action regarding healthcare pricing, along with several bills making their way through Congress this year.

The executive order calls for the issuance of a proposed rule by the secretary of the US Department of Health and Human Services (HHS) within 60 days that requires hospitals to publicly post standard charge information, “including charges and information based on negotiated rates and for common or shoppable items and services,” in a user-friendly format. While we are uncertain as to how far the proposed HHS rule is likely to go, what will be included in the categories of “shoppable” items and services, or what the eventual implications for antitrust law will be, the constitutionality of such disclosures is being called into question by some constitutional scholars. For example, noting that hospitals already provide consumers with information on pricing, the American Hospital Association has observed that “publicly posting privately negotiated rates could, in fact, undermine competitive forces of private market dynamics.” The industry will need to look closely at the HHS proposed rule once issued.