A federal judge has confirmed a Trump administration policy that requires hospitals and health insurers to publish their negotiated health care prices. These numbers are usually kept secret.
The directive is part of a major move by the administration to improve transparency in healthcare. Insurers and healthcare providers usually negotiate business behind closed doors, and patients only know the cost of services after the fact.
Government officials said more price transparency would result in lower and more predictable prices in an industry with large areas of insurers paying for services. A simple blood test can cost $ 11 or $ 1,000, for example. Coronavirus testing shows a similar variation with prices ranging from $ 27 to $ 2,315.
In a lawsuit however, the American Hospital Association stated that the administration did not have the legal authority to publish the negotiated prices on the grounds that the publication of the prices could have perverse effects. On Tuesday, judge Carl Nichols disagreed.
In his decision Judge Nichols stated that hospitals "attack transparency measures in general" in order to restrict patients' insight into medical prices.
19659002] "Hospitals can be affected by market changes and must respond to a market where consumers are more empowered," he wrote, explaining that this was not a reason "to make the rule illegal".
Judge Nichols, who was appointed The DC District Court last year also dismissed the hospital's other arguments: the new rules would create overwhelming administrative burdens and the increased transparency could actually drive prices up.
"The agency suggested that customers be informed to put pressure on providers to reduce costs and improve the quality of care," wrote Judge Nichols.
The effects of price transparency policy remain unclear among health economists and other experts. The Trump administration has argued that published prices will help empower individual patients and employers who take out health insurance for their workers, which will put pressure on the market to prevent overload.
Research on price transparency in health care, which has been limited but has not done so, has had a major impact: A study of a New Hampshire law requiring published prices for shared services showed very modest price reductions . A number of studies from other areas, including Chilean gasoline and Danish ready-mixed concrete have shown that the publication of negotiated prices in markets where there are few competitors can sometimes backfire and increase prices.
Judge Nichols admitted that "the evidence in the files is not final" to prove that transparency lowers prices, but that it is "more compelling than a decades-old case study of Danish ready-mixed concrete contracts".
The hospital rule is part of the government's drive to control health costs through transparency, an effort that has become a health priority for President Trump. The hospital rule was preceded by a regulation on price transparency in health care which was unveiled at an event in the White House at which patients talked about their experiences with surprising medical bills.
This is not the only part of this transparency effort to overcome legal obstacles. A federal appeals court rejected another rule according to which pharmaceutical manufacturers would have to include the price of medicines in television advertising.
Alex Azar, Secretary of Health and Human Services, welcomed the court's decision: “With today's victory, we will continue to honor the President's promise to provide patients with easy access to health care prices. Especially when patients seek the necessary care during a public health emergency, it is more important than ever that they have immediate access to the actual prices for health services. "
The hospital association said he would appeal the decision. "The proposal does not help patients understand their expenses," said Melinda Hatton, the association's senior vice president and general counsel. "It also places a significant burden on hospitals at a time when resources are running out."
The price transparency rule is expected to enter into force in January.