By: HUB’s EB Compliance Team
In two separate rulings, released fairly close in time, the Trump Administration both won and lost battles on price transparency. At first glance, it might appear that the rulings are inconsistent. However, a closer look reveals they are not.
The U.S. Court of Appeals for the District of Columbia Circuit struck down the Centers for Medicare and Medicaid Services (“CMS”) rules requiring pharmaceutical companies to include prices in their commercials. Only a few days later, the Washington D.C. District Court upheld the hospital transparency rules issued by CMS.
Why Two Different Results?
The main difference? CMS was authorized by Congress under the Affordable Care Act to issue the hospital transparency rule. Therefore, it was well within its authority to issue the rule. The American Hospital Association did make other arguments against the rule, but ultimately it was the direct Congressional authority that won the day.
By contrast, for the drug pricing rule, CMS relied on its general authority to issue rules supporting the “efficient administration” of the Medicare and Medicaid programs. In other words, the court essentially said CMS did not have an explicit authorization to issue the drug pricing transparency rule, but instead relied on a “catch-all” provision in the Medicare and Medicaid statute. The rule, the court said, did not have enough connection (or “nexus,” to use a lawyerly term) to the administration of Medicare and Medicaid to fit within the “catch-all” provision.
What’s Next?
Despite this article’s title, drug pricing transparency is not necessarily dead yet. CMS could appeal to the Supreme Court for a review. Congress could also pass a law explicitly authorizing a drug pricing transparency rule. Absent Congressional action, though, the rule seems unlikely to survive court challenges.
Similarly, hospital pricing transparency can still be challenged on appeal, so the road is not over yet. Additionally, if the Supreme Court invalidates the entire Affordable Care Act (as part of a separate case it plans to hear this fall or early next year), then the authority for the hospital transparency rule would evaporate.
Conclusion
The results of these two cases do not have direct impacts on employers. That said, greater price transparency (in any form) may lead to a more competitive marketplace and ultimately to lower health care costs. However, the ultimate effect of these and other transparency initiatives remains to be seen.
If you have any questions, please contact your HUB Advisor. You can also view more compliance articles in our Compliance Directory.
NOTICE OF DISCLAIMER
The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.