Another Win for VBC: Hospital Price Transparency Mandate Upheld


In a major victory for the independent practice of medicine and the value-based care movement, a lawsuit brought by The American Hospital Association (AHA) against The US Dept. of HHS* was dismissed on summary judgment. The US District Court of DC upheld the mandate for hospitals to make public their charges by 1/1/21, noting, “CMS stated that this information would… “promote value choices in obtaining a healthcare insurance product.””

The Court did not appear moved by any of the plaintiff’s arguments, evidenced throughout its decision:

“…had Congress intended to require the publication of just a hospital’s chargemaster or chargemaster rates, it could easily have done so by using the term “chargemaster.””

“Plaintiffs’ half-hearted argument here relies on several inapposite cases that applied strict scrutiny where the government sought to regulate communicative content or target a specific message or speaker.”

“Plaintiffs do not appear to dispute that the agency’s asserted interest in increasing transparency is substantial. Instead, they argue that the Rule is unjustified because the publication of hundreds of prices will “confuse” patients and “frustrate . . . [their] decisionmaking.””

“Plaintiffs are essentially attacking transparency measures generally, which are intended to enable consumers to make informed decisions; naturally, once consumers have certain information, their purchasing habits may change, and suppliers of items and services may have to adapt accordingly.”Finally, the Court did not seem persuaded by the AHA’s argument that the burden of the requirement would “get in the way of providers spending time with patients.”

Price transparency is likely to accelerate the transition from fee-for-service (FFS) to value-based care (VBC), as patients will finally be able to obtain the cost of their care prior to receiving it.  Those that can provide the best, most comprehensive care – at a competitive price – will attract the most patients.  VBC, not FFS, provides the mechanism to do so.

Under a FFS system, price is determined not by value, but by leverage.  Thus, FFS makes it difficult for independent medical groups to compete with large health systems and corporations.  Under a VBC system, providers get reimbursed based on the actual value they provide (outcome, experience, cost, etc.) for “episodes of care” (certain diagnoses or procedures) or for caring for large populations of patients.  VBC levels the playing field, but it cannot effectively exist if the prices for services are kept secret.  They no longer can be.

For independent practices that have not yet started the journey from FFS to VBC, this ruling is yet another compelling reason to do so.


Brian S. Kern, Esq., Partner, Acadia Professional. | View Bio

*American Hospital Association et al v Azar, U.S. District Court, District of Columbia, No. 19-03619

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