In November 2019, CG Attorneys wrote about the Centers for Medicare & Medicaid Services’ (CMS)  price transparency rule requiring hospitals to publish prices for services beginning in 2021.  Under the rule, hospitals must provide customers the “standard charges” for all services and supplies.  Standard charges include gross charges, discounted cash prices, payer-specific negotiated charges, de-identified minimum negotiated charges, and de-identified maximum negotiated charges.  The standard charges must be provided in a machine-readable format on a searchable platform in a prominent location online or in written form, when requested.  Also, hospitals must describe the services in plain language.  Under the rule, CMS may impose a civil monetary penalty (CMP) for violations or request a corrective action plan, and hospitals are afforded appeal rights.  After exhaustion of the appeal process, any imposition of a CMP must be paid within 60 calendar days after the final decision.

In response to the price transparency rule, three hospitals and four healthcare associations (the American Hospital Association (AHA), the Association of American Medical Colleges (AAMC), The Federation of American Hospitals (FAH), and the National Association of Children’s Hospitals, Inc. (CHA)) sued the U.S. Department of Health and Human Services (HHS).  The lawsuit alleges that the price transparency rule violates the First Amendment, is arbitrary and capricious, and will cause “concrete and imminent harm absent judicial intervention.”  In a joint statement released by the associations, FAH President and CEO Chip Kahn explained: “CMS’ final rule fails to offer patients easy-to-understand information regarding their out-of-pocket obligations for care – so we feel obligated to contest the regulation. We contend the agency exceeded its authority and should go back to the drawing board.”  

In June 2020, U.S. District Judge Carl Nichols in Washington, D.C. granted summary judgment for HHS and dismissed the lawsuit.  The hospitals and healthcare associations appealed.  On December 29, 2020, two days before the rule went into effect, the U.S. Court of Appeals for the District of Columbia Circuit affirmed the district court’s grant of summary judgment.  The Court rejected the plaintiffs’ arguments that the price transparency rule should be subjected to strict scrutiny and noted that HHS met the reasonableness standard.  “The 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 … [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.”  The Court also held that the plaintiffs did not show a burden on speech to support the First Amendment claim.  

The final rule is downloadable here

The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection with regulatory matters and government investigations.  If you need assistance with such a matter, please contact us today.