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The Decision is in: Hospitals Will be Required to Disclose Rates in 2021

In a June 23, 2020 decision, Judge Nichol of the United States District Court for the District of Columbia ruled in favor of the Center for Medicare and Medicaid Services (“CMS”) and against the plaintiff hospital associations challenging CMS’s transparency rule. As a result,  hospitals will (pending any appeals) have to post private negotiated rates with payors effective January 1, 2021.  We discussed the lawsuit brought by the American Hospital Association (“AHA”), the Federation of American Hospitals, the Children’s Hospital Association and the Association of American Medical Colleges against CMS in our previous article.

Judge Nichol decided that CMS’ Final Rule would allow patients to make educated pricing comparisons and decide which hospital is best for their care.  His decision focused on empowering consumers and requiring hospitals to participate in a more competitive market.

Hospitals maintain that the Final Rule imposes a great burden on hospitals at a time when resources are already stretched thin because of the pandemic. In fact, the AHA has indicated that it will appeal the decision on an expedited basis.  Under the Final Rule, hospitals will be required to publish their standard rates online in a machine-readable format.  Also, they will need to create at least 300 shoppable services, including 70 services which are selected by CMS.  Hospitals have stated that complying with this rule will put an administrative burden on them which in turn will increase costs for patients.  Further, the AHA believes that complying with these administrative tasks will do nothing more than divert resources away from patient care.

In hopes of ensuring that the price transparency rule does not get overturned in the inevitable appeals to Judge Nichol’s decision – the AHA announced that it would appeal the ruling the same day it was issued – Senate Republicans introduced legislation on July 1, 2020 that would codify a price transparency rule into statute. Led by Sen. Chuck Grassley, R-Iowa, the “PRICE Transparency Act,” if adopted into law, would make it unlikely that the AHA or any other potential litigants would be able to avoid the transparency requirements from going into effect.

We will continue to follow the PRICE Transparency Act and the appeals of the transparency decision.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume X, Number 188

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About this Author

Steven J. Chananie, Sheppard Mullin, complex healthcare transactions lawyer, compliance arrangements attorney
Partner

Steven Chananie is a partner in the Corporate Practice Group in the firm's New York office, focusing on healthcare issues. Mr. Chananie has represented numerous healthcare providers, advising them on regulatory and fraud and abuse issues in the structuring of complex healthcare transactions and arrangements; guiding them in the resolution of potential compliance problems; and assisting them in implementing or modifying their compliance programs.  Mr. Chananie has also defended numerous clients against civil government actions and investigations, including in False Claims...

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Kimberly Rai Lawyer Sheppard Mullin NYC
Attorney

Kimberly Rai is an attorney in the Corporate Practice Group in the firm's New York office.

As a member of the firms Due Diligence Team, Ms. Rai supports the Corporate and Finance & Bankruptcy Practice Groups on various matters relating to mergers and acquisitions, venture capital and private equity.

Prior to joining the firm, Ms. Rai worked in house as Assistant General Counsel for a retail energy supplier. She has experience in retail energy compliance and general corporate matters

Education

  • J.D., Fordham University School of Law
  • B.A., New York University
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