Court Ruling Upholds Hospital Price Transparency Requirements

Thoughtware Alert Published: Jul 07, 2020
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On June 23, 2020, the U.S. District Court for the District of Columbia rejected challenges made by the American Hospital Association (AHA) and other hospital groups to CMS’ guidelines regarding pricing transparency, published as a supplement to the calendar-year 2020 Outpatient Prospective Payment System final rule. 

In the final rule, effective January 1, 2021, CMS expands interpretations of Section 2718(e) of the Public Health Service Act, defining “hospital” and the “items and services” that are covered under the requirements. CMS also redefined and expanded the definition of “standard charges” to include five separate concepts: gross charge, payor-specific negotiated charge, de-identified minimum negotiated charge, de-identified maximum negotiated charge, and discounted cash price. 

AHA and other hospital groups claimed the final rule exceeds CMS’ authority and the requirement to disclose payor-specific negotiated charges would undermine competition and violate the First Amendment free speech rights. The U.S. District judge said the rule was reasonable related to the government’s interest in lowering healthcare costs and giving consumers better pricing data to help make informed decisions regarding treatment. 

While the AHA indicated it plans to appeal the recent decision and seek an expedited review, the Trump administration sees the decision as a victory toward helping consumers be more informed about what they might pay for hospital items and services, increasing market competition, and ultimately driving down the cost of healthcare services. 

With the latest court decision and the momentum favoring broad efforts for more price transparency in the healthcare industry, hospitals will want to continue planning for how they’ll collect and report on the required elements by the January 1, 2021, effective date.

BKD’s Health Care Performance Advisory Services (HCPAS) professionals can help hospitals navigate the new price transparency requirements and develop a plan for incorporating these requirements into the hospital’s overall pricing strategy. For more information, reach out to your BKD HCPAS trusted advisor or use the Contact Us form below.

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