In which Merrick Garland sides with...Donald Trump. On a healthcare case.

via Samantha Liss at HealthCare Dive:

It's unsurprising the nation's hospital lobby lost its latest legal challenge in the case to force hospitals to reveal the negotiated rates they reach with insurers for services provided to patients.  

The three-judge panel was highly skeptical of the hospital lobby's claims when it heard oral arguments in October and pushed back in their line of questioning.

...The undoing of the case may have been when AHA's litigator told judges certain prices are "unknowable." 

That only provoked more questions from primarily two of the three judges who seemed baffled by the assertion that prices were unknowable. Judges Merrick Garland and Tatel — both appointed by former President Bill Clinton — launched into a lively line of questioning about the cost of X-rays. 

...The hospital lobby had argued that it's impossible to know the rates because in some instances a patient may require more care than was originally anticipated. 

But Tatel said these arguments miss the mark. Hospitals are not required to disclose all the possible prices, instead they're required to disclose base rates that are negotiated with insurers.

Hospital pricing transparency is one of the few issues related to heatlhcare policy in which Donald Trump a) had a rationale which went beyond "let's destroy something Obama created;" b) actually had a coherent policy put together and c) which, while I have reservations about it, at least I don't strongly oppose, anyway.

As always, the devil is in the details, and believe it or not, there are some valid arguments against it as well, which were laid out last March (shortly after CMS issued the rule) in this Health Affairs article:

The goal of the new price transparency rule is to bolster consumer-style competition through “shopping” to lower individual and systemwide health care costs. The main problem with this goal is that health care does not follow the traditional rules of consumer economics. Intuitively, we know there is a big difference between purchasing the latest in cell phone technology and having a surgical procedure...

The literature suggests that a very small fraction of people who have access to transparency tools actually use them. Despite claims that consumer-driven health plans will lead patients to be more cost conscious, recent findings on the impact of these plans suggest that they typically are not associated with increased price shopping.

I think the idea here is that unlike buying a smartphone, where you'll naturally look for the lowest price, when it comes to healthcare, most people will assume that more expensive = higher-quality care; when you're having surgery you don't generally want to cut corners.

They then list 10 possible consequences, some positive, some negative (I've truncated each one):

  • Prices for some hospital services will become more competitive.
  • Prices will increase for other hospital services.
  • Some regions may see higher prices overall.
  • The new dynamics of negotiation will accelerate consolidation.
  • Some rural and safety-net hospitals will not be able to survive.
  • Adoption of new technology will slow unless it has a very strong value proposition.
  • Payers will experiment with new benefit designs and reimbursement models.
  • Price transparency will add a new dimension to antitrust compliance.
  • The rule will not affect the majority of consumers, who are insulated from the true cost of health care.
  • The rule could complicate efforts to advance value-based payment. 

Even with all of these potential issues, I still lean towards being optimistic about the change. As noted on my Twitter feed today, healthcare costs and hospital consolidation continues to increase at an unacceptably fast rate as it is, so it's not like "do nothing" is going to slow that down...and at least this would lay out the larger problem in a clear, obvious way.

For one thing, a lot of progressive healthcare reform activists are big fans of going the "All-Payer Rate Setting" route (in which every procedure is priced the same at the same hospital regardless of who pays for it). That's not easy to do when you don't even know how much different payors are paying now...and while that information is presumably available to those in the industry, it wouldnt' be a bad thing to let the public have the ability to see how the sausage is being made as well, even if most of them won't bother doing so.

Anyway, we'll see how it goes under the Biden Administration and newly-installed HHS Secretary Xavier Becerra, assuming he's confirmed.