Hospitals Sue to Block Disclosure of Treatment Costs

(CN) – Several hospital groups sued the Trump administration Wednesday in an effort to keep their procedure prices secret as health care costs – and profits – continue to rise.

An 85-year-old patient is checked by a nurse on July 16, 2019, as he recuperates from open-heart surgery at the Rocky Mountain Regional VA Medical Center in Aurora, Colo. (Shawn Fury/VA Eastern Colorado Health Care System via AP)

The federal lawsuit, filed against Health and Human Services Secretary Alex Azar in Washington, D.C., says a new rule that requires hospitals to disclose the discounts they give insurers on medical procedures is unlawful, arbitrary and capricious, and will puzzle their patients.

“The final rule will generate confusion about patients’ financial obligations, not quell it,” the suit says, also claiming the hospitals require secrecy in order to negotiate the best rates with health insurance companies and stoke competitive pricing.

More information is not the same thing as better information,” the complaint continues. (Emphasis in original)

The rule, issued last month by the Department of Health and Human Services’ Centers for Medicare and Medicaid Services, or CMS, requires that hospitals post on their websites five types of pricing information for each service and item they provide, including the insurer-negotiated charges and a discounted cash price, or how much the hospital would charge an uninsured patient for a service.

In a statement Wednesday, Health and Human Services spokesperson Caitlin Oakley said the Trump administration remains committed to transparency in the U.S. health care system.

“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it,” she said.

The rule is set to take effect Jan. 1, 2021.

The plaintiffs – which include the American Hospital Association, Association of American Medical Colleges, National Association of Children’s Hospitals and three individual health centers – say compliance would take up more time and resources than they can afford and could even result in a production of data that could crash computer systems. They also say the rule violates their First Amendment rights by compelling speech.

When the administration announced the rule last month, Azar told reporters that even he has trouble parsing health care costs for his family, according to a teleconference transcript.

“This shadowy system has to change; the patient has to be in control,” he said. “That requires giving the patient the right to know what they’re going to owe for a health care service before they ever get it. The vast majority of patients don’t have easy access to this information today, but when they do, we see prices drop.”

Azar cited a study that reported imaging prices dropped 20% when they were made transparent, and a poll that found 93% of Americans were surprised by a medical bill in 2018.

The hospitals — represented by Catherine E. Stetson and Susan M. Cook of Hogan Lovells in Washington, D.C. – agree patients should have more information when it comes to their health care, Wednesday’s suit says.

“But the final rule frustrates those goals. When a patient chooses a hospital, what she wants to know is her out-of-pocket costs, not an insurer’s ‘negotiated charges,’” the complaint states.

The hospitals say that the rates they negotiate with insurers aren’t a reliable indicator of how much money a patient can expect to pay out of pocket, for example in a co-payment or as part of a deductible. Patient costs, they say, depend on the separate contract those patients have with their insurers.

“Patients’ out-of-pocket costs are typically driven by their plan design, deductible, co-insurance, and co-payment requirements, not the rates negotiated between hospitals and insurers,” the suit says, adding that nothing written in the rule helps patients calculate what they will pay.

Stetson did not immediately return a request for comment Wednesday.

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