Appeals court ruling paves way for price transparency rule to go into effect on Jan. 1

Gavel with scales of justice in background
The American Hospital Association is seeking an emergency stay to delay enforcement of the Trump administration's price transparency rule. (William_Potter / iStock / Getty Images Plus)

UPDATED at 10 a.m. on Dec. 30

Despite a last-minute attempt by hospital groups to secure an emergency stay, a federal appeals court has ruled that the Trump administration can move forward with rolling out its price transparency rule on Jan. 1.

In an order (PDF) filed Tuesday, the judge argued that hospitals' arguments "miss the mark" in presenting a case for why the rule, which will force providers to post the rates they've negotiated with health plans, is harmful to their business.

"The [American Hospital Association] does not dispute that the government has a legitimate interest in promoting price transparency and lowering healthcare costs. Instead, it contends that the rule bears no reasonable relationship to those governmental interests because the required disclosures 'may not be immediately or directly useful for many health care consumers,'” the judge wrote. "But...the secretary, relying on complaints from consumers, studies of state initiatives, and analysis of industry practices, reasonably concluded that the rule’s disclosure scheme will help the vast majority of consumers."

In a statement, Melinda Hatton, general counsel for the AHA, said the group is "reviewing the decision carefully to determine next steps."

Compliance with the rule will impose significant costs on hospitals and providers, she said, at a time when they're swamped with COVID-19 cases.

"The AHA continues to believe that the disclosure of privately negotiated rates does nothing to help patients understand what they will actually pay for treatment and will create widespread confusion for them," Hatton said. "We also believe it will accelerate anticompetitive behavior among commercial health insurers and hinder innovations in value-based care delivery."

The American Hospital Association (AHA) is seeking an emergency stay to delay enforcement of the Trump administration's price transparency rule when it goes into effect Jan. 1.

The AHA and other appellants argue in the filing that the rule should be put on hold until their legal challenge plays out. Hospitals are awaiting a decision from a federal appeals court on the regulation following oral arguments in October.

The rule would require hospitals to post payer-negotiated payment rates for 300 shoppable services online beginning Jan. 1. The goal is to encourage patients to shop around for care.

In the filing (PDF), the AHA warns that hospitals have received mixed messages on how they can comply with the rule.

RELATED: Insurers: Price transparency rule puts 'staggering,' expensive burden on us

"Even as CMS prepares to enforce the price transparency rule, hospitals lack clarity about how to implement it," the AHA said in the filing. "During a webcast on December 8, 2020, CMS advised that a common strategy that hospitals and their vendors have pursued to comply with the rule would not satisfy its requirements."

"Thus, even some hospitals that believed they were on track may find themselves subject to noncompliance penalties after the rule takes effect on January 1, 2021," the AHA said.

In addition, the AHA argues in the filing that hospitals' resources are already stretched thin as COVID-19 cases rise and vaccine distribution begins, making compliance with the rule an even greater challenge.

"Absent intervention from this Court, hospitals will be forced to devote staff time to complying with the rule that is now spent expanding bed capacity, planning for the vaccine rollout, and satisfying virus reporting obligations," the association said. "Whatever the public’s interest in hospital price transparency, it pales in comparison to the immediate public interest in an effective coronavirus response."