American Hospital Association v. Azar

The Affordable Care Act required hospitals to publicize a list of their standard charges in accordance with guidelines developed by the Department of Health and Human Services (HHS) (defendant). Initially, HHS required hospitals to publish only their chargemaster lists. A chargemaster list contained a hospital’s full-price fees, which almost no one paid. In 2019, HHS issued a new transparency rule intended to help healthcare consumers make more informed decisions and to drive down prices. Under this new rule, hospitals had to publish a complete list of their “standard charges” rather than just set prices. This public list included the prices negotiated with insurers, which hospitals and insurers had typically kept confidential. Additionally, hospitals had to publish a shorter, “consumer-friendly list” of 300 “shoppable services” that a consumer could schedule in advance. The new rule applied only to hospitals and not to ambulatory surgical centers or physicians. After reviewing public comments, HHS estimated it would take 150 hours to create the initial lists for each hospital location but expected that time would decrease as third-party vendors developed tools to streamline the process. HHS acknowledged that the lists might be complex for consumers. However, HHS anticipated that data disclosure was the first step and that third parties would soon use the data to develop consumer-friendly price-aggregator tools. The American Hospital Association (association) (plaintiff) sued HHS under the Administrative Procedure Act (APA), alleging the new rule was invalid because it was arbitrary and capricious. The association raised two primary arguments: (1) compliance was infeasible, and (2) the rule would harm consumers more than it helped. On feasibility, the association argued that providing a list of standard hospital charges was logistically infeasible or impossible. Actual charges were based on complex algorithms negotiated with individual insurers, sometimes spanning dozens of pages per agreement. Prices also varied depending on each patient’s conditions and needs, so any procedure could generate an almost infinite range of possible prices. The association claimed preparing the two required lists would take much longer than HHS had estimated. On harm, the association argued that any published list would be either too complex or too simplistic to inform consumer decisions, likely confusing consumers more. Also, publishing previously confidential pricing could allow anticompetitive collusion and raise prices. Thus, the association contended that the rule’s benefits did not justify its burden, making it arbitrary and capricious. The district court granted summary judgment to HHS. The association appealed.