- Hospital groups filed a lawsuit against HHS on Wednesday over a final rule that would force hospitals to reveal the secret rates they negotiate with insurers for services.
- The lawsuit, filed by the American Hospital Association, other industry groups and health systems, said the administration's push on prices exceeds the government's authority and violates the First Amendment because it compels hospitals to reveal confidential and proprietary information.
- An HHS spokeswoman told Healthcare Dive the administration will continue to push price transparency to help patients make informed decisions. "Hospitals should be ashamed that they aren't willing to provide American patients the cost of a service before they purchase it," Caitlin Oakley said.
The plaintiffs argued that revealing negotiated rates will confuse patients, overwhelm hospitals and thwart competition and said it does nothing to help people understand their actual out-of-pocket costs and what they will owe a provider.
The negotiated rates can't help a patient understand whether their treatment is covered under their plan or whether the treatment is subject to cost-sharing or the patient's deductible, the lawsuit filed in the U.S. District Court for the District of Columbia states.
The plaintiffs want the rule vacated and are asking for a prompt ruling. They are looking for swift relief as hospitals are forced to begin "substantial planning" to be in compliance by Jan. 1, 2021, when the rule is set to go into effect.
The hospitals warn that coming into compliance with the rule will likely divert resources from "other pressing health care needs."
Three hospital systems also are included as plaintiffs — one each in California, Nebraska and Missouri — and they face "imminent actual injury," the lawsuit argues.
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 products lines, including Medicare Advantage, HMO or PPO, according to the lawsuit.
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.
"Hospitals and health systems report that a file of this size could easily crash most standard computer systems, and some members worry about the ability of their websites to function at all with such a large file," according to the lawsuit.
The plaintiffs warned that releasing this information would harm competition, and point to a letter from the Federal Trade Commission to Minnesota's House of Representatives to back up their claim. In the letter from 2015, the FTC warned Minnesota lawmakers that revealing price information may chill competition and increase the likelihood of collusion.
"Hospitals and commercial health insurers keep the rates they privately negotiate confidential for good reason: it would undermine competition if they were required to be disclosed publicly and blunt incentives for health insurers to participate in innovative arrangements that have the potential to lower costs and increase quality," the lawsuit states.
The administration also wants to force insurers to reveal the same pricing information through a proposed rule that was unveiled last month. At the time, the administration 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. The administration said this information needs to come before a procedure, not after.
"But that is a far cry from mandating that all negotiated rates for all insurers and all services be collected and posted publicly on the internet for all the world to see," according to the filing. "That information is considerably more commercially sensitive than a single price disclosed to a private patient and may not be representative of what a patient covered by the same insurer but through a different employer would pay."
The plaintiffs in the lawsuit include AHA, the Association of American Medical Colleges, the Federation of American Hospitals, the National Association of Children's Hospitals, Memorial Community Hospital and Health System, Providence Holy Cross Medical Center and Bothwell Regional Health Center.