Most hospital patients, like consumers in general, should be able to learn the cost of what they're buying before purchase, a group of free-market-advocacy organizations argue.
In a filing with the Washington, D.C. Circuit Court of Appeals, the organizations – including the Texas Public Policy Foundation – added their support to the federal government as it attempts to introduce a transparency rule linked to rates negotiated between hospitals and insurance companies, or the out-of-pocket cash cost.
A lower court found in favor of Health Secretary Alex Azar in the action taken by the American Hospital Association (AHA), which claimed the final rule "does nothing to help patients understand their out-of-pockets costs."
Attorney Jeffrey Harris
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The AHA and other providers posited a First Amendment argument, claiming the rule was "arbitrary and capricious," and that the U.S. Department of Health and Human Services (HHS) is exceeding its authority.
"It also imposes significant burdens on hospitals at a time when resources are stretched thin and need to be devoted to patient care," the AHA said in a statement issued following the district court ruling. "Hospitals and health systems have consistently supported efforts to provide patients with information about the costs of their medical care. This is not the right way to achieve this important goal."
The amicus filing was made on behalf of the Texas Public Policy Foundation, PatientsRightsAdvocate.org, the Independent Women’s Law Center, the Policy Foundation, Association of Mature American Citizens and Free2Care.
Oral arguments are scheduled to be heard Oct. 15, 2020.
The amicus brief argues that "hospital patients — like consumers of any other goods or services in a market economy— know upfront the cost of what they are buying before they make a purchase."
"Up-to-date information about prices is an indispensable feature of a market economy," attorney Jeffrey Harris of Consovoy McCarthy in Arlington, Virginia, wrote in the brief. "No one would buy an airplane ticket, article of clothing, tank of gasoline, life insurance policy or a new car or house without knowing how much that item costs before buying it. Indeed, it would be inconceivable for the sellers of those products to hide the true prices from consumers and then reveal them only weeks or months later when the consumer receives a bill.
"The health care sector is different," Harris continued. "Even though health care comprises nearly 20% of the U.S. economy and more than $3 trillion in annual spending, that sector has been largely immune from market forces, price competition and comparison shopping."
While the AHA claims the negotiated rates are confidential, the consumer advocacy organizations counter that is not strictly true because facilities do reveal to patients an "explanation of benefits" after receiving care. Further, the appellants argue that to introduce such a rule would be "unduly burdensome," that hospital pricing is complicated and that many factors feed in to the final price of services.
"But that is a reason for more transparency, not less," Harris wrote. "Indeed, it would be absurd for hospitals and insurers to develop highly complicated and convoluted pricing systems and then invoke that complexity as an excuse to keep customers in the dark."
The brief concedes it may be difficult at times for patients to shop around prior to treatment, most notably emergency care.
But emergency care accounts for only 6% of total health, and advocacy groups argue that "at least 43% of health care spending could be 'shoppable' if consumers had the information needed to enable meaningful comparison shopping."
Under the proposed rule, hospitals will be required to list charges for each category of patient who may use its services. For out-of-pocket payments, that would represent the cash price, while those with employer-provided insurance, particularly high-deductible plans, the rate negotiated between the hospital and the insurer.
