The Trump Administration and American patients won a victory today in federal court when Judge Nichols ruled against the American Hospital Association’s lawsuit, which sought to block orders for price transparency.
In June of last year, President Trump issued an executive order directing the Secretary of Health and Human Services to require “hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in easy-to-understand formats so as to inform patients about actual prices.”
In December 2019, the American Hospital Association, joined by three other national organizations representing hospitals and health systems, sued the Trump Administration in federal district court challenging the CMS final rule requiring that hospitals disclose their rates negotiated with commercial health insurers.
They argued instead that standard charges should be what is called a chargemaster, which is a hyper-inflated list of prices that are rarely consistent with the rates negotiated with insurers. The plaintiffs also claimed that patients simply wouldn’t understand the information. According to the ruling, “plaintiffs do not appear to dispute that the agency’s asserted interest in increasing transparency is substantial.” Instead, they argued that the rule is unjustified because the publication of hundreds of prices will “confuse” patients and “frustrate decision making.”
The American public thinks otherwise. According to a national survey, nearly 9 out of 10 people believe all prices in healthcare should be disclosed. This is truly a bipartisan issue as the data demonstrates that the respondents were equally in favor regardless of political affiliation. The responses also showed that patients would feel more comfortable getting the care they may need if they knew the prices in advance. A significant percentage of patients have high deductible health plans which for many services makes them cash buyers. Knowing the negotiated rates can mean the difference of hundreds, if not thousands, of dollars that could remain in the pockets of Americans.
Judge Nichols rightly granted the motion for summary judgment to Health and Human Services and dismissed all arguments lodged by the plaintiff. As expected, individuals celebrated the agency’s proposals. They shared their experiences dealing with the opaqueness of health care pricing and expressed frustration and anger at the inability to predict their share of the costs before receiving treatment at a hospital. Some advocates of the proposed rule remarked that “knowledge of healthcare pricing in advance would benefit consumers and empower them to make lower cost choices.”
To help America recover from the COVID-19 pandemic, Congress should enact measures that provide long-term relief to patients, workers, and businesses – not just short-term, emergency aid. Reforms that reduce health care prices and the cost of coverage should be a priority and codification of the rule would be the right approach. Transparent pricing in healthcare is the first step in having a more competitive environment where patients can choose and hospitals compete.