A prominent business group is suing HHS and other federal agencies over new price transparency regulations that apply to health insurers.
The U.S. Chamber of Commerce argues in a lawsuit filed this week in the U.S. District Court for the Eastern District of Texas, Tyler division that new rules under the so-called Transparency in Coverage Rule are both unlawful and overly burdensome, and urges a judge to throw them out. The lawsuit lists a number of federal agencies defendants, including HHS, CMS, the Department of Labor, the Department of the Treasury and the Internal Revenue Service.
Almost all health insurers and self-insured plans will have to comply with the provisions, which kick in incrementally for plans that start on or after Jan. 1, 2022 through Jan. 1, 2024. The Trump administration published the final rule on insurer price transparency in November.
The chamber, together with the Tyler Area Chamber of Commerce, is specifically targeting a provision that requires insurers to post on their websites three machine-readable files: one that shows the in-network rates they’ve negotiated with providers, another with their allowed out-of-network rates and third that shows their rates for prescription drugs. That provision takes effect for plan years beginning on or after Jan. 1, 2022.
The federal government cites a provision of the Affordable Care Act as the source of its authority to compel disclosure of the machine-readable files. However, the chambers note that the ACA provision says disclosures must be made in “plain language.” The chamber argues the machine-readable file requirement forces plans to disclose “vast amounts” of highly technical pricing data in a “digital representation” designed to be readable by a computer, instead of plain language designed to be accessible to individual patients and consumers.
“Because that complicated, unwieldy format cannot be reconciled with Congress’s command that disclosures be made in plain language, the machine-readable-file requirements violate the law and must be set aside,” the complaint says.
The lawsuit’s argument is effectively that because plain language and machine-readable are inconsistent, the entire provision should be struck, said Delphine O’Rourke, partner in Goodwin’s life sciences and healthcare practice.
While O’Rourke said she thinks that’s a smarter argument than the one hospitals used in their own failed attempt to scrap the hospital price transparency rule, this one faces a similar uphill battle. The American Hospital Association argued in part that providers can’t reasonably determine what something will cost under after patients get care.
The average patient probably won’t use the data insurers disclose, because many people are covered under employer-sponsored plans that pick an insurer for them, O’Rourke said. For insurers, the concern isn’t patients will learn their rates, it’s that other insurance companies will, she said.
“If you’re an insurance company and your competitor has a machine-readable format and you have a platform that can read their data, they’re opening their files to their competitors, which is a real issue,” O’Rourke said.
A Labor Department spokesperson said the Department of Justice is representing the agency in the case. The DOJ did not respond to a request for comment. The other agencies listed in the lawsuit also did not respond to requests for comment.
The lawsuit also takes issue with the rule’s requirement that insurers share their historical net prices for all covered drugs, arguing that the proposed rule did not mention the term “historical net price,” and thus affected parties did not receive meaningful notice and opportunity to comment. In that respect, the chambers argue the federal agencies violated the Administrative Procedure Act by imposing the new requirement, which they say must be set aside.
That point has a better chance of winning over a judge, because that phrase was indeed not in the proposed rule, O’Rourke said.
“If you can’t predict with reasonable certainty that laws are going to be enforced the way they were written, that becomes very disruptive on legal compliance and on businesses in general,” she said.
The lawsuit notes the price transparency regulations will cost billions of dollars in the first year and hundreds of millions of dollars annually every year thereafter to comply. The complaint also calls the historical net price and machine-readable file requirements “arbitrary and capricious.” It asks the judge to declare those provisions unlawful and vacate them, and also provide injunctive relief from enforcement.
In its complaint, the U.S. Chamber of Commerce calls itself the world’s largest business federation. The group, which did not return a request for comment, represents about 300,000 members and indirectly represents the interests of more than 3 million companies and professional organizations across all industries and parts of the country.
The chamber noted in the complaint it’s also a self-insured employer that will incur “substantial costs” to comply with the rule.
The Tyler Area Chamber of Commerce represents about 1,800 members, including in the Eastern District of Texas. That group also did not respond to a request for comment.
The lawsuit was likely filed by business groups instead of health insurers because they can talk about the rules’ effects on jobs and small, American businesses, O’Rourke said.
“Insurers just don’t get the sympathy that your small business owner is going to get,” she said.
For plans beginning on or after Jan. 1, 2023, insurers will have to provide 500 shoppable services in a consumer-friendly format, a requirement that expands to all services beginning for plans that start on or after Jan. 1, 2024.