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UPDATE: Hospital companies plan litigation over Trump's price transparency rule

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UPDATE: Hospital companies plan litigation over Trump's price transparency rule

Four national hospital groups have vowed to challenge the Trump administration's finalized price transparency rule in court.

The hospital representatives said in a Nov. 15 statement that the finalized rule, which requires hospitals to make prices privately negotiated with insurance companies public, exceeds the administration's authority and will increase prices.

"Instead of helping patients know their out-of-pocket costs, this rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery," the statement said.

Continuing, the companies said the rule "does not achieve the goal of providing patients with out-of-pocket cost information, and instead threatens to confuse patients."

The American Hospital Association, Federation of American Hospitals, Association of American Medical Colleges and Children's Hospital Association are the four hospital groups that intend to sue.

Alex Azar, secretary for the U.S. Department of Health and Human Services, addressed the possibility of a lawsuit on a Nov. 15 call with reporters, saying that the federal government has the authority to enforce the price transparency regulations.

"We may face litigation, but we feel we're on a very sound legal footing for what we're asking," Azar said.

SNL Image

Hospital companies say they will file suit over the Trump administration's new price transparency rule.

Source: File photo

After passing on including a price transparency provision in a Nov. 1 finalized rule, the Centers for Medicare and Medicaid Services finalized a separate policy Nov. 15. The Trump administration also issued an executive order directing HHS, which CMS is a part of, to finalize a price transparency rule.

Under the finalized rule, hospitals would be required to make public privately negotiated prices with insurance companies, post those prices online in a way that can be read by different computer systems, and post online the prices of 300 "shoppable" services. Additionally, the rule would allow CMS to issue a $300-per-day fine for noncompliance.

During a Nov. 15 press conference at the White House, President Donald Trump said the rule will help lower healthcare costs and stop patients from getting "ripped off."

Trump also said the hospital industry will no longer like him because of the finalized rule, "But that's okay, right?"

A 'major disruptor'

John Nicolaou, healthcare expert with PA Consulting, called the price transparency plan a "major disruptor" for the hospital industry. Nicolaou, however, noted that the pricing information "will not be readily consumable in its raw form by most consumers," a point echoed by the hospital industry.

Chip Kahn, president and CEO of the Federation of American Hospitals, said in a separate statement that patients should have access to the price of services and cost-sharing information, but the rule will not accomplish this goal. The rule will "result in patient overload of useless information while distorting the competitive market for purchasing hospital care," Kahn said.

Beth Feldpush, senior vice president of policy and advocacy for America's Essential Hospitals, commented that the finalized rule threatens access to care and puts hospitals at a disadvantage when negotiating prices with insurers. The rule will undermine hospitals' ability to negotiate equitable payments, she added.

The hospital industry has fought back against the idea of price transparency since reports came out in March indicating CMS was considering the policy. The possibility of a lawsuit came up during a July 29 call with reporters when CMS ultimately proposed the rule, but the agency's Administrator Seema Verma said the "administration is not afraid of those things."

Along with the transparency rule for hospitals, CMS also proposed to require similar disclosures from insurance companies. That proposal, issued with HHS, Department of the Treasury and Department of Labor, would require insurance companies like Anthem Inc. to issue pricing information.

The insurance industry's push back was muted compared to the hospital companies. Matt Eyles, president and CEO of health insurance trade group America's Health Insurance Plans, said that AHIP supports transparency to better inform patients' decision making and allow for competitive negotiations for pricing.

However, Eyles said neither the proposed or finalized rule "satisfies these principles."