Readers may remember late last year when the Trump Administration published the Hospital Outpatient Prospective Payment System (OPPS) Price Transparency final rule which requires hospitals to post the prices for services that they privately negotiated with insurance companies.
Shortly after the final rule was published, the American Hospital Association (AHA) and others sued to stop the rule. The groups alleged that the Rule exceeded the Department of Health and Human Services’ (HHS) statutory authority, violated the First Amendment, imposed a significant burden on hospitals, and was “arbitrary and capricious and lacks any rational basis.” In the suit, the groups asked the court to vacate the rule. AHA and its co-plaintiffs filed a Motion for Summary Judgment, as did the Department of Health and Human Services.
District Court Opinion
Because both sides filed Motions for Summary Judgment, the case did not go to trial. The ruling came from United States District Court for the District of Columbia Judge Carl Nichols, who denied AHA’s Motion for Summary Judgment and granted HHS’ Motion for Summary Judgment.
In his decision, Judge Nichols found that the hospitals were trying to limit patients’ insight into medical prices by “attacking transparency measures generally” and while “hospitals may be affected by market changes and need to respond to a market where consumers are more empowered,” that alone is not a reason to “make the rule unlawful.”
Judge Nichols also found that the Final Rule is legal under the Public Health Service Act, which pertains to disclosure of “standard hospital charges” and enforcement, and under the Social Security Act, which gives the HHS Secretary general authority to establish rules and regulations as necessary.
Judge Nichols did not find favorably on AHA’s other positions either, including their arguments that the rule would drive up prices and create administrative burdens for hospitals.
Reactions and Next Steps
HHS Secretary Alex Azar applauded the court’s decision, saying, “With today’s decision, we will continue delivering on the President’s promise to give patients easy access to healthcare prices. Especially when American patients are seeking care during a nationwide public health emergency, it is more important than ever that they have ready access to the actual prices of healthcare services.”
Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma tweeted that the ruling is a “huge WIN for American patients. This was a disingenuous self-serving lawsuit designed to keep patients in the dark.”
The American Hospital Association plans to appeal the decision. In a statement released by Melinda Hatton, General Counsel of AHA, “Today’s decision was also premised on the erroneous conclusion that the “standard charges” referenced in current law can be interpreted to include rates negotiated with third-party payers. While the Court ruled that this was a close call, that conclusion clearly does not reflect the experience of hospitals and health care systems.” As it stands right now, the rule is slated to go into effect in January 2021.