Do you agree that hospitals keeping pricing agreements with payers secret is really protected speech?

On Wednesday, the American Hospital Association sued the Trump administration over a proposed rule compelling hospitals to publish secret negotiated rates with insurers would violate the First Amendment. They also argued such regulation is otherwise not rooted in law. [Wall St. Journal]

Without commenting on the merits of price disclosure or administrative rule making, it feels like the First Amendment claim is a potentially costly overreach.  The First Amendment’s speech provisions explicitly prevent the government from limiting most kinds of speech, and courts have ruled, neither can the government compel speech. But is requiring hospitals to report their agreements with payers actually speech?

Price disclosure is something the government routinely forces

From the government’s perspective, requiring the disclosure of a lowest rates is a common requirement in bidding on federal or state work. If the speech claim were to hold, its likely another reporting approach would be found to sidestep this objection. This advances a clear policy agenda, which is to address an informational asymmetry that exists between hospitals who have expert knowledge of treatment and costs compared to consumers who have limited information as they agree to care.

From a hospital’s perspective, this is an administrative requirement with a modest $300/day fine for non-compliance. This pales compared to the hard dollar investment required by regulators to manage capacity or provide free care. What the AHA actually seeks to avoid is the public relations impact of not following this requirement. One might argue the force of this law is public sentiment and not regulation per se.

The free speech argument worked for drug companies regarding advertising

Drug makers successfully used speech protection in their lawsuit this July, which blocked a similar rule requiring them to disclose pricing on all television ads for drugs. Obviously the speech component of this case which addressed the content of advertising was far greater than merely posting rates. [Wall St. Journal|.

This adds to healthcare’s ‘trust problem’

Over the last two decades the Internet has lessened informational asymmetries that previously forced customers to overpay. Consumers today get better deals when buying cars, booking travel, or buying a range of goods because they can now easily price compare. But hospitals routinely ask patients to enter their care unable to accurately project the final cost of even routine procedures. Healthcare as a ‘trust problem’, and it starts with opaque pricing, and what can seem like a disregard of those caring for patients physical health to consider their financial health as well.

Speech rights are fundamental, and I don’t seek to minimize them here. But there is no inherent right to be paid for health services by the federal government. There is little doubt that a legal basis will be found to advance transparency requirement in a way consistent with speech rights.

Hospitals can influence how this eventually takes place – but arguing a constitutionally inherent right to secret pricing risks alienating the public, and unnecessarily increasing the level of mistrust between patients and providers. In short, the AHA lawsuit is preserving a serious problem rather than fixing it. The speech claim is dubious, and in the long-term blocking price disclosure won’t help restrain costs or empower patients.

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