Price Transparency Lawsuit

As expected, the American Hospital Association (AHA) and others have sued the federal government for the price transparency requirement. This lawsuit was filed regarding the upcoming mandate for hospitals to disclose their private negotiated rates with commercial payers.

The Centers for Medicare & Medicaid Services (CMS) has made their goal clear—to allow patients to be better informed about the prices they are paying for procedures. It is time for people to speak up and collaborate in order to create a solution. Transparency is not going anywhere with value-based care (VBC), risk share models, and advanced payment models (APMs). CMS and the Center for Medicare and Medicaid Innovation (CMMI) have identified that these proposals are not the end goal rather first steps in the process.

It is important to dissect and evaluate some of the claims from the AHA:

  1. “Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry.”
    What confusion would this cause? Education and rollout are instrumental in mitigating confusion. In addition, consolidation among payers has been occurring for the last 5-7 years, with the big five leading the way—Blue Cross Blue Shield, United Healthcare, Aetna, Cigna and Humana. The worry is that additional consolidation, fueled by the transparency initiative, will lead to increased premiums. Premiums may increase, but it will not be the sole responsibility of the transparency legislation. Identifying what payer contracts are will encourage alignment among payers.
  2. “The rule will cause burden to the hospitals.”
    This would need some form of elaboration. In the mandate, CMS made the format and information that they expect to see very clear. This is nothing more than an Excel file hosted on the hospital’s website. Download Legion’s webinar to see their requirements. MARU INSERT LINK (

Value-based care depends on several types of data, including claims data and operational/clinical data. This is how we build costing models for procedures and services. The other piece of information needed is the amount paid. This is why the negotiated rates are needed. The data has shown across different facilities, the significant discrepancies in negotiated rates by same and different payors, for equivalent procedures. This included healthcare providers in the same town. These rates will allow for a level of standardization, showing outliers on the high and low sides.

This could benefit payors, patients and providers. It is important to remember, this is a starting point, not the resolution. Value-based care cannot be talked about without having the data to base actionable decisions.

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