Federal judges seem to support CMS hospital transparency rule

THREE FEDERAL appellate judges last week appeared likely to uphold the Trump administration’s hospital price transparency rule, which is scheduled to go into effect in January.

The panel aggressively, and at times incredulously, questioned hospitals’ arguments as to why the rule should be deemed unconstitutional. The criticism indicated that the U.S. Court of Appeals for the District of Columbia Circuit may follow in the footsteps of a district court judge who upheld the rule.

Under the hospital price transparency rule, hospitals must publish their standard charges online in a machine-readable format. They will need to provide prices for at least 300 “shoppable” services, including 70 selected by CMS. Under the rule, hospitals would have to disclose the rates they negotiate with third-party payers.

During oral arguments a key issue was whether when Congress used the

Public Health Service Act to let CMS require hospitals to publish lists of “standard charges for items and services” it also gave the agency power to force hospitals to publish rates negotiated with insurers.

Williams & Connolly partner Lisa Blatt, who represented the American Hospital Association, claimed that it is more reasonable to ask hospitals to disclose chargemaster prices instead of negotiated prices, claiming negotiated prices may be misleading because they may not accurately reflect patients’ out-of-pocket costs.

Courtney Dixon, counsel representing the Trump administration, said that even if negotiated rates are not a perfect reflection of patients’ out-of-pocket costs, patients could use the numbers to at least try to estimate their bills.

The judges pointed out that chargemaster prices are often highly inflated and may also be misleading.

“I’m not buying your argument to the extent that you are making it that the chargemaster rate is discernibly more transparent than what the government is proposing,” Judge Harry Edwards said. “If I’m hearing you correctly, your principal objection has nothing to do with worrying about transparency. It’s just the government’s approach is more burdensome on you and more expensive.”

The judges also clarified that the transparency statute’s purpose includes communicating prices to the public, including patients.

The judges also puzzled over hospitals’ argument that the numbers for what an item or service would cost ahead of time were “unknowable.” Blatt said that costs can vary based on severity.

Dixon countered that if a certain rate disclosure is not relevant, a hospital can just say the rate is not available. ●