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Legal Insights and Perspectives for the Healthcare Industry

In what has become the new “normal” in Washington, DC, these days, hospitals and their associations filed a lawsuit today against the US Secretary of Health and Human Services (Secretary) challenging the recent Final Rule issued by the Centers for Medicare and Medicaid Services (CMS) on November 27, 2019, addressing hospital pricing disclosures.

In its complaint, the American Hospital Association, joined by the Association of American Medical Colleges, the Federation of American Hospitals, the National Association of Children’s Hospitals, Inc. (d/b/a Children’s Hospital Association), and three representative hospitals in Missouri, California, and Nebraska (collectively, Plaintiffs), argue that the Secretary issued a Final Rule that (1) is unlawful and in excess of his statutory authority; (2) is a violation of the First Amendment by unlawfully compelling speech; and (3) is arbitrary and capricious, an abuse of discretion, and contrary to law, citing the Administrative Procedures Act (APA).

Price transparency rules impacting hospitals, health plans and third-party payers released by the Trump administration promise to substantially change how health plans, consumers, and providers will interact over the coming years. In this LawFlash, our healthcare industry team unpacks the final rule requiring hospitals to make standard charges public and the proposed transparency in coverage rule requiring group health plans and health insurance issuers to disclose negotiated rates with providers and out-of-network estimates for consumers. Across the industry as a whole, plans and providers alike will have to undertake additional costs to update their current programs, technology, and web pages to comply with the price transparency rules and take on or train personnel to maintain that programming and technology.

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CMS has released a pair of rules “that take historic steps to increase price transparency to empower patients and increase competition among all hospitals, group health plans and health insurance issuers in the individual and group markets.” To that end, health plans would be required to disclose their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers on a public website, according to the proposed rule. CMS also finalized its proposed hospital price transparency program released as part of the CY 2020 proposed outpatient prospective payment system (OPPS) rule last August.

Morgan Lewis is reviewing these rules more fully and will provide additional analyses on the proposed health plan rule and the final hospital transparency rule in the coming days.

We address more than a dozen key proposals from the CMS outpatient prospective payment system (OPPS) and ambulatory surgical center payment systems proposed rule in a recent LawFlash. Chief among them is the agency’s bold new proposal for a broad price transparency program. Other notable proposals include continuing payment reductions for 340B drugs and grandfathered off-campus provider-based departments, both the subject of pending litigation in federal court. CMS is soliciting public input on a multitude of proposals from this rule, and comments are due September 27, 2019. Hospitals will want to carefully assess these changes and consider submitting comments before these proposals become final rules.

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“Medicare for All” has appeared in the nation’s political dialogue as we head into the next election cycle, with a number of plans being proposed by Democratic lawmakers. Recent public opinion polls show a growing surge in popularity for expanding the federal program that currently insures older Americans. Yet the polls also show a decline in favorability for Medicare for All when respondents are asked about the details of the plans. While there appears to be general agreement that Americans should have access to affordable coverage, the Democratic plans differ over options for reforming the health insurance system. To that end, the Medicare for All plans can be divided into one of two categories: a single payor or a public option plan. From there, the proposals diverge over a mix of fault lines, tradeoffs, and potential for disruption.