Federal judge rules against hospitals in clash over CMS price transparency rule

courtroom
A federal judge ruled against hospital groups seeking to get rid of a CMS price transparency rule that requires facilities to post payer-negotiated rates. (Image: Pixabay)

A federal judge has ruled against a lawsuit brought by hospital groups that challenges the Trump administration’s rule to require hospitals post charges they negotiate with payers.

The ruling issued Tuesday by the U.S. District Court for the District of Columbia dealt a major blow to hospitals — as well as insurers — who claimed the Centers for Medicare & Medicaid Services’ rule that goes into effect in January is onerous.

Hospital groups sued CMS late last year charging the agency did not have the statutory authority to mandate the rule, which requires hospitals post payer-negotiated charges in order to give consumers more transparency.

Research

Learn What 1,000 People Said About Their Virtual Care Experiences During COVID-19

72% of patients had their first virtual visit during the pandemic and most now want it as a permanent option. Learn what else our survey revealed about their experiences with virtual visits, preferences for scheduling them, and more.

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

They contended that the Affordable Care Act only allows CMS to require that “standard charges” from a hospital be posted and that term does not include third-party negotiated rates. The hospitals argued that the term “standard charges” only applies to “chargemaster” rates, which refer to a billable medication, procedure or service.

However, Judge Carl Nichols ruled that if Congress wanted the law to only apply to “chargemaster” rates then it would have said so. Since Congress didn’t use that term, it is strong evidence that “standard charges” doesn’t just mean “chargemaster,” the ruling said.

The judge also shot down hospitals’ arguments about the burden of the rule. The lawsuit said that the rule could require hospitals to publish a long list of charges because a hospital often negotiates a different charge with a different payer for the same service or procedure.

“It is a close call whether the agency reasonably interpreted ‘standard charges’ to include rates negotiated with third-party payers,” the ruling said. “After all, the more charges published for any one item or service, the less any one of these charges can be considered ‘unusual’ or ‘customary.’”

RELATED: Hospitals sue CMS over price transparency rule

However, the ruling didn’t find CMS’ interpretation of the term unreasonable. The judge noted that CMS focused on contracted rates because such rates can be made public in advance of a patient’s care.

The American Hospital Association, Association of American Medical Colleges, Federation of American Hospitals, National Association of Children’s Hospitals and several regional systems filed the suit in December.

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 AHA said on Tuesday that it will appeal the decision.

Today’s decision was premised on the erroneous conclusion that the “standard charges” referenced in current law can be interpreted to include rates negotiated with third-party payers," the AHA said. "While the Court ruled that this was a close call, that conclusion clearly does not reflect the experience of hospitals and health care systems."

Suggested Articles

Healthcare employment continued to recover in June as the sector gained 358,000 jobs, with hospitals starting to add jobs after losses in May.

While the COVID-19 pandemic has wreaked financial havoc across healthcare, it did not stymie mergers and acquisition deals as much as anticipated.

Some labs are starting to reach capacity for COVID-19 testing amid a major spike in cases across sunbelt states, HHS reported.