Nov 18, 2019

Hospitals vow to take Trump to court

Caitlin Owens, author of Vitals

Illustration: Aïda Amer/Axios

Hospitals immediately promised to sue the Trump administration after it released two new price transparency regulations on Friday, threatening the future of one of the president's most ambitious health policies.

Why it matters: Politically, the Trump administration could use a win: Most of its other signature health reforms either didn't come to fruition or are tied up in court.

The big picture: Both of the administration's new proposals would require the health care industry to release more information on prices.

  • The hospital price transparency rule, which requires the disclosure of negotiated rates, is final and will be implemented in January 2021 — if it withstands the legal challenges against it.
  • A second regulation, which is just a proposed rule for now, would require insurers to tell patients their out-of-pocket obligations ahead of time and to disclose negotiated rates with providers.

Immediately after the rules were released, hospital groups vowed to sue.

  • "Because the final rule does not achieve the goal of providing patients with out-of-pocket cost information, and instead threatens to confuse patients, our four organizations will soon join with member hospitals to file a legal challenge to the rule on grounds including that it exceeds the Administration’s authority," they wrote in a statement.

Details: Tom Nickels, executive vice president of the American Hospital Association, told me that the hospitals plan to sue on three grounds:

  1. The administration doesn't have the authority to require them to disclose their negotiated rates.
  2. The rule violates their First Amendment rights to have private conversations with insurers, and this intrusion into that right isn't narrow, as courts have said intrusions must be.
  3. The rule deals with trade secrets, and again, courts have said that to overrule these the focus must be narrow. “This is anything but narrowly focused," Nickels said.

The other side: Health and Human Services Secretary Alex Azar told reporters on Friday that “we feel we’re on a very sound legal footing for what we’re asking."

  • “I would certainly hate to see the hospitals take a play out of Big Pharma’s playbook" by opposing price transparency, he added.

What we're watching: Nickels said that the AHA will file suit "in the next several weeks."

  • Meanwhile, the industry has time to fight to keep the second rule from being finalized.
  • Although Nickels said he supports the part of the proposal that requires insurers to give patients more information about their out-of-pocket costs, he's not on board with requiring insurers to reveal negotiated rates: "I think on a policy basis we would equally object to what they're doing to the insurers."

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