`United States Court of Appeals
`FOR THE DISTRICT OF COLUMBIA CIRCUIT
`
`
`
`Argued October 15, 2020
`
`
`Decided December 29, 2020
`
`No. 20-5193
`
`AMERICAN HOSPITAL ASSOCIATION, ET AL.,
`APPELLANTS
`
`v.
`
`ALEX M. AZAR, II, IN HIS OFFICIAL CAPACITY AS SECRETARY
`OF HEALTH AND HUMAN SERVICES,
`APPELLEE
`
`
`Appeal from the United States District Court
`for the District of Columbia
`(No. 1:19-cv-03619)
`
`
`
`Lisa S. Blatt argued the cause for appellants. With her on
`the briefs was Whitney D. Hermandorfer.
`
`Chad I. Golder was on the brief for amici curiae Forty
`State Hospital Associations in support of appellants.
`
`Benjamin G. Shatz was on the brief for amicus curiae
`Healthcare Financial Management Association in support of
`appellants.
`
`Daryl L. Joseffer, Tara S. Morrissey, Jeffrey S. Bucholtz,
`and Joel McElvain were on the brief for amicus curiae
`
`
`
`
`
`2
`
`Chamber of Commerce of the United States of America in
`support of appellants.
`
`Courtney L. Dixon, Attorney, U.S. Department of Justice,
`argued the cause for appellee. With her on the brief were Ethan
`P. Davis, Acting Assistant Attorney General, Scott R.
`McIntosh, Attorney, Robert P. Charrow, General Counsel,
`U.S. Department of Health & Human Services, Brenna E.
`Jenny, Deputy General Counsel & Chief Legal Officer-CMS.
`
`Robert Henneke and Jeffrey M. Harris were on the brief
`for amici curiae Texas Public Policy Foundation, et al. in
`support of appellee.
`
`Before: TATEL and GARLAND*, Circuit Judges, and
`EDWARDS, Senior Circuit Judge.
`
`Opinion for the Court filed by Circuit Judge TATEL.
`
`
`TATEL, Circuit Judge: As part of the Affordable Care Act,
`
`Congress required hospitals to make public “a list” of “standard
`charges” in accordance with guidelines developed by the
`Secretary of Health and Human Services. 42 U.S.C.
`§ 300gg-18(e). By rule, the Secretary defined “standard
`charges” to include prices that hospitals charge insurers. The
`American Hospital Association and others challenge the rule,
`arguing that it violates the statute, the Administrative
`Procedure Act, and the First Amendment. For the reasons set
`forth in this opinion, we affirm the district court’s grant of
`summary judgment to the Secretary.
`
`
`* Judge Garland was a member of the panel at the time this case
`was argued but did not participate in the final disposition of the
`case.
`
`
`
`
`
`3
`
`I.
`
`Understanding the issues before us requires an explanation
`of how hospitals charge for their services. In short, their
`charges look nothing like hotel room rates or car prices. Rather,
`hospitals charge different amounts for the same item or service
`depending on who is paying.
`
`Three different groups pay hospitals for care: patients,
`insurers, and the federal and state governments (for Medicare
`and Medicaid). The first group, “self-pay” patients, pay
`directly for their care because they have no insurance, receive
`elective or out-of-network care, or believe that paying directly
`is cheaper than relying on insurance. Self-pay patients account
`for fewer than 10 percent of all patients. Price Transparency
`Requirements for Hospitals to Make Standard Charges Public
`(Price Transparency Requirements), 84 Fed. Reg. 65,524,
`65,542 (Nov. 27, 2019). Hospitals generally charge these
`patients rates specified in what is called “chargemasters,”
`which list all items and services provided by each hospital with
`their “gross charges.” Id. at 65,537. Many hospitals offer
`discounts to self-pay patients based on standardized cash
`discounts or individual financial need (or both). As a result,
`chargemaster rates are “virtually never what hospitals
`ultimately receive as payment.” Appellants’ Br. 7. Although
`these gross charges “bear little relationship to market rates
`[and] are usually highly inflated,” Price Transparency
`Requirements, 84 Fed. Reg. at 65,538, they exist for “historical
`and legal reasons,” Appellants’ Br. 7–8. Specifically, Medicare
`requires hospitals’ charges for Medicare and non-Medicare
`patients to be the same for a specific service, and hospitals
`comply with that requirement by listing chargemaster rates as
`if they were applicable to everyone, even though hospitals
`receive different payments depending on the payer’s identity.
`
`
`
`
`
`4
`
`Over ninety percent of patients rely on third-party payers,
`i.e., insurers, Medicaid, and Medicare. Medicaid and Medicare
`pay hospitals based on rates set by the states and the Centers
`for Medicare & Medicaid Services. Those rates are public.
`Price Transparency Requirements, 84 Fed. Reg. at 65,542,
`65,552. Insurance companies have contractual agreements with
`hospitals to pay negotiated rates for their services. Although
`insurers and hospitals often treat chargemaster rates as the
`“starting point” for negotiations, negotiated rates are a product
`of a wide range of methodologies. Appellants’ Br. 8. Insurers
`may pay fixed fees for individual items and services, or they
`may pay for bundled packages based on common procedures,
`per diem rates, or other variable factors, set out in “many
`dozens of pages of text.” Id. at 8 (internal quotation marks
`omitted). They may also pay according to a “diagnosis-related
`group” methodology, under which a rate is established for a
`group of hospital items and services based on the typical care
`provided to a patient with a particular diagnosis. The Medicare
`statute requires diagnosis-related-group classifications for
`inpatient Medicare reimbursements, and some private insurers
`use these classifications to establish rates with hospitals. 42
`U.S.C § 1395ww(d)(4); Price Transparency Requirements, 84
`Fed. Reg. at 65,534. In addition, insurers may pay different
`amounts based on volume discounts, incentive payments for
`meeting quality metrics, and exclusions for certain services.
`
`With so many different methodologies for setting rates,
`determining what negotiated rate applies to a particular patient
`for a particular item or service is “exceedingly complex.”
`Appellants’ Br. 8. Adding to the complexity, negotiated rates
`are not necessarily what insured patients would pay, as their
`out-of-pocket costs depend on their health insurance plan,
`which has its own rules on copays, deductibles, and coverage
`limits.
`
`
`
`
`
`5
`
`Patients usually learn what a given hospital service cost
`only after the fact, either from a hospital bill or an “Explanation
`of Benefits” form from their insurance company; the latter
`details the insurer’s negotiated rates and the patient’s out-of-
`pocket costs. Patients are “understandably frustrated by their
`inability to easily determine in advance what they may pay
`out-of-pocket for hospital services.” Id. at 6. According to the
`Secretary, this lack of price transparency has contributed to an
`healthcare. Price
`“upward
`spending
`trajectory”
`in
`Transparency Requirements, 84 Fed. Reg. at 65,525–26.
`
`Against this backdrop, Congress passed the Affordable
`Care Act of 2010, which added section 2718, entitled
`“Bringing down the cost of health care coverage,” to the Public
`Health Service Act. In language central to this case, subsection
`2718(e) requires “[e]ach hospital operating within the United
`States” to “each year establish (and update) and make public
`(in accordance with guidelines developed by the Secretary) a
`list of the hospital’s standard charges for items and services
`provided by the hospital, including for diagnosis-related
`groups established under [the Medicare reimbursement
`statute].” 42 U.S.C. § 300gg-18(e). The statute nowhere
`defines “standard charges.”
`
`Following passage of the Affordable Care Act, the
`Secretary allowed hospitals to comply with section 2718(e) by
`making their chargemasters public. Transparency Requirement
`Under the Affordable Care Act, 79 Fed. Reg. 49,854, 50,146
`(Aug. 22, 2014). But in 2018, the Secretary found that
`“challenges continue to exist for patients due to insufficient
`price transparency” because chargemaster data were “not
`helpful to patients for determining what they are likely to pay
`for a particular service or hospital stay.” Requirements for
`Hospitals to Make Public a List of Their Standard Charges via
`the Internet, 83 Fed. Reg. 20,164, 20,549 (May 7, 2018). As a
`
`
`
`
`
`6
`
`their
`to make
`the Secretary required hospitals
`result,
`chargemasters available online in a machine-readable format.
`He also sought public comment on how “standard charges”
`should be defined and “what types of information would be
`most beneficial to patients.” Id.
`
`In June 2019, President Trump issued an Executive Order
`titled “Improving Price and Quality Transparency in American
`Healthcare to Put Patients First.” Exec. Order No. 13,877, 84
`Fed. Reg. 30,849 (June 24, 2019). The Executive Order
`directed the Secretary to “propose a regulation, consistent with
`applicable law, to require hospitals to publicly post standard
`charge information, including charges and information based
`on negotiated rates and for common or shoppable items and
`services.” Id. at 30,850. Two months later, the Secretary issued
`a notice of proposed rulemaking, which explained that despite
`the existing requirements to post their chargemaster rates
`online, “consumers continue to lack the meaningful pricing
`information they need.” Proposed Requirements for Hospitals
`to Make Public a List of Their Standard Charges, 84 Fed. Reg.
`39,398, 39,571, 39,574 (Aug. 9, 2019). The Secretary proposed
`requiring hospitals to disclose not just chargemaster rates, but
`also “payer-specific negotiated charges” for their items, and to
`disclose them in two different ways: a single digital file
`containing charges for all
`items and services, and a
`“consumer-friendly”
`list of charges for
`three hundred
`“shoppable” services, defined as services that can be scheduled
`in advance, id. at 39,402, 39,579–80, 39,589–90, “like a
`colonoscopy,” Appellants’ Br. 56. The notice estimated that
`compliance with the rule would require twelve hours per
`hospital and proposed an effective date of January 1, 2020.
`Proposed Requirements for Hospitals to Make Public a List of
`Their Standard Charges, 84 Fed. Reg. at 39,400, 39,403.
`
`
`
`
`
`7
`
`After receiving nearly four thousand comments, the
`Secretary issued a final rule that defines “standard charge” as
`“the regular rate established by the hospital for an item or
`service provided to a specific group of paying patients.” Price
`Transparency Requirements, 84 Fed. Reg. 65,524, 65,540
`(Nov. 27, 2019). To qualify as a “regular rate,” the rate must
`be formalized in advance—e.g., through hospital contracts or
`fee schedules—and there must be an “identifiable” group of
`patients for whom that rate would usually apply. Id. at 65,546,
`65,539, 65,542. The rule lists five categories of standard
`charges that hospitals must disclose: gross charges from
`chargemasters; payer-specific negotiated charges; standardized
`discounted cash prices offered to self-pay patients before any
`individualized discounts; and maximum and minimum
`third-party negotiated charges for a given item or service,
`without identifying the specific payer (“de-identified minimum
`. . . and maximum negotiated charge[s]”). Id. at 65,540. In
`response to comments, the Secretary waived the three hundred
`shoppable services list requirement for hospitals already
`providing internet-based price estimator tools for patients. Id.
`at 65,577. The Secretary also revised the initial compliance
`burden estimate up to 150 hours per hospital in the first year
`and 46 hours per hospital in subsequent years. Id. at 65,591–94,
`65,596. Finally, persuaded that “some hospitals may find it
`challenging to initially comply with the new requirements . . .
`in a short timeframe,” the Secretary delayed the rule’s effective
`date by one year to January 1, 2021. Id. at 65,585.
`
`The American Hospital Association, joined by other
`associations,
`individual hospitals, and hospital systems
`(collectively, the “Association”), filed suit, arguing that the
`rule’s interpretation of “standard charges” violates section
`2718(e), the APA, and the First Amendment. The district court
`granted summary judgment to the Secretary on all three claims.
`American Hospital Ass’n v. Azar, 468 F. Supp. 3d 372 (D.D.C.
`
`
`
`
`
`8
`
`2020). Our review is de novo. See St. Luke’s Hospital v.
`Thompson, 355 F.3d 690, 693 (D.C. Cir. 2004).
`
`II.
`
`The Association argues that the rule rests on an unlawful
`
`interpretation of section 2718(e) and that no Chevron deference
`applies partly because the President, through his June 2019
`Executive Order, “picked the definition of ‘standard charges’
`that [the Secretary] adopted.” Appellants’ Br. 43. The
`the validity of Chevron
`Association even “question[s]
`deference,” though it “recognize[s] the doctrine binds this
`Court.” Id. at 41 n.10. The Secretary points out that he adopted
`his interpretation after notice-and-comment rulemaking and
`argues that his interpretation is the best one and at a minimum
`reasonable under Chevron.
`
`Although we have no reason to doubt Chevron’s
`
`applicability, we need not decide that question here. Even if
`Chevron were inapplicable, we would “proceed to determine
`the meaning of” section 2718(e) by “decid[ing] for ourselves
`the best reading.” Miller v. Clinton, 687 F.3d 1332, 1342 (D.C.
`Cir. 2012) (internal quotation marks omitted). Employing the
`traditional tools of statutory interpretation—text, structure, and
`purpose—and following the “‘fundamental canon of statutory
`construction that the words of a statute must be read in their
`context and with a view to their place in the overall statutory
`scheme,’” we conclude that the best reading of section 2718(e),
`including the two statutory phrases at issue, i.e., “standard
`charges” and “a list,” permits the Secretary to adopt the
`challenged rule. Roberts v. Sea-Land Services, Inc., 566 U.S.
`93, 101 (2012) (quoting Davis v. Michigan Department of
`Treasury, 489 U.S. 803, 809 (1989)); see In re Sealed Case,
`932 F.3d 915, 928 (D.C. Cir. 2019).
`
`
`
`
`
`
`
`9
`
`Standard Charges
`
`The Association focuses primarily on the rule’s inclusion
`of negotiated rates among the “standard charges” that hospitals
`must disclose. Based on the dictionary definition of “standard”
`as usual, common, or model, it argues that the definition is
`“antithe[tical]” to the rule’s inclusion of negotiated rates for
`identifiable patient groups as “standard charges.” Appellants’
`Br. 27. Rather, the Association contends, the “most natural
`way” to interpret the term “standard charges” is to define it as
`the seller’s list price—such as the manufacturer’s suggested
`retail price for cars—or “a jumping-off point,” even if few
`consumers pay the list price. Id. at 27, 32.
`
`Viewed in its entirety, however, section 2718(e) is best
`interpreted as requiring disclosure of more than list prices. See
`American Coal Co. v. Federal Mine Safety & Health Review
`Commission, 796 F.3d 18, 25–26 (D.C. Cir. 2015) (“General-
`usage dictionaries cannot invariably control our consideration
`of statutory
`language, especially when
`the ‘dictionary
`definition of . . . isolated words[] does not account for the
`governing statutory context.’” (alterations in original) (quoting
`Bloate v. United States, 559 U.S. 196, 205 n.9 (2010))). Recall
`that the provision requires hospitals to disclose “a list of the
`hospital’s standard charges for items and services provided by
`the hospital, including for diagnosis-related groups established
`under [the Medicare reimbursement statute].” 42 U.S.C.
`§ 300gg-18(e) (emphasis added). The “including for” clause
`gives an illustrative example of “standard charges.” That is, the
`list must contain standard charges for items and services, as
`well as standard charges for things like “diagnosis-related
`groups” established under the Medicare statute, i.e., charges
`bundled for a given diagnosis as opposed to charges for
`individual items and services. See Puerto Rico Maritime
`Shipping Authority v. Interstate Commerce Commission, 645
`F.2d 1102, 1112 n.26 (D.C. Cir. 1981) (“It is hornbook law that
`
`
`
`
`
`10
`
`the use of the word ‘including’ indicates that the specified list
`. . . that follows is illustrative, not exclusive.”); see also
`Include, The Merriam-Webster Collegiate Dictionary 629
`(11th ed. 2011) (“include” means “to take in or comprise as a
`part of a whole or group”). Reading the statute’s “including
`for” clause as illustrative of charges that are bundled together
`and negotiated between hospitals and insurers, as does the
`Secretary, gives effect to “‘every clause and word of [the]
`statute.’” TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001)
`(quoting United States v. Menasche, 348 U.S. 528, 538–39
`(1955)). By contrast, the Association’s interpretation—that the
`clause requires hospitals to disclose nothing more than
`already-public Medicare charges—not only
`renders
`it
`redundant of the Medicare statute’s requirement that the
`Secretary make all Medicare charges public, but also conflicts
`with the rest of section 2718(e), which requires disclosure of
`each hospital’s charges, not charges set by the Secretary.
`
`Context and congressional purpose reinforce this reading.
`As to the former, because hospitals have numerous different
`charges that are formalized in contracts with third-party payers,
`rather than one “standard charge” applicable to all, or even
`most, patients, the dictionary definition of “standard” is
`unhelpful. The Association’s contention that chargemaster
`rates represent “universal default prices irrespective of payer,”
`Appellants’ Reply Br. 3, moreover, is inconsistent with its
`assertion that hospitals have chargemaster rates simply to
`comply with the Medicare requirement that Medicare and
`non-Medicare patients be charged the same. See Appellants’
`Br. 7–8. Chargemaster rates, in other words, are neither
`universal nor default, except for purposes of complying with
`the letter of the Medicare rule. Given this context, the statute
`allows the Secretary to define standard charges more broadly
`as regular rates set in advance for identifiable groups of
`patients.
`
`
`
`
`
`11
`
`As to purpose, Congress enacted section 2718, as its title
`demonstrates, to “[b]ring[] down the cost of health care
`coverage.” See INS v. National Center for Immigrants’ Rights,
`Inc., 502 U.S. 183, 189 (1991) (“[T]he title of a statute or
`section can aid in resolving an ambiguity in the legislation’s
`text.”). The Secretary was concerned that chargemaster rates,
`though previously treated as adequate for complying with
`section 2718(e), in fact failed to sufficiently inform patients of
`their costs. This is because, as the Association concedes,
`patients rarely pay chargemaster rates. Appellants’ Br. 7; Price
`Transparency Requirements, 84 Fed. Reg. at 65,542. Given
`this, and given the Secretary’s finding that requiring disclosure
`of negotiated rates will help more patients select hospitals with
`more affordable rates, the Secretary interpreted the undefined
`term “standard charges” in a way that best effectuates
`congressional intent to lower healthcare costs. The best reading
`of the statute is that it permits such an interpretation. See PDK
`Laboratories, Inc. v. DEA, 362 F.3d 786, 796 (D.C. Cir. 2004)
`(“The words of the statute should be read in context, . . . and
`the problem Congress sought to solve should be taken into
`account.”).
`
`The Association also challenges the rule’s inclusion of
`discounted cash prices and de-identified maximum and
`minimum negotiated rates as standard charges. Focusing on the
`definition of the word “discounted,” the Association contends
`that “a discount” is “by definition[] a departure from the norm”
`and therefore not “standard.” Appellants’ Br. 31. The rule,
`however, makes clear that the “discounted cash price” category
`refers only to standardized discounts that hospitals give to
`cash-paying patients and excludes individualized discounts
`based on financial circumstances. Price Transparency
`Requirements, 84 Fed. Reg. at 65,553. Defined that way,
`discounted cash price is a formalized rate that applies to a set
`group of patients regardless of individual circumstances, just
`
`
`
`
`
`12
`
`like third-party negotiated rates. As for the de-identified
`maximum and minimum negotiated rates, they are simply a
`subset of already-disclosed negotiated rates listed in separate
`columns. As explained above, section 2718(e) permits the
`Secretary to require disclosure of negotiated rates, and
`requiring hospitals to display certain datapoints separately falls
`squarely within the Secretary’s authority to develop guidelines
`for making the list public.
`
`A List
`
`Turning its attention to a different word in section 2718(e),
`the Association argues that the rule’s requirement of both a
`comprehensive, machine-readable list of charges for all
`services and a separate, consumer-friendly shoppable services
`list runs afoul of section 2718(e)’s requirement that hospitals
`publish “a list” of standard charges. The Secretary, echoing his
`argument with respect to de-identified maximum and minimum
`charges, points out that the charge information in the shoppable
`services list is a subset of the information already made public
`in the comprehensive file. Id. at 65,575. For example, getting a
`colonoscopy may incur charges for anesthesia, a pathology lab
`service, and a facility fee. Id. at 65,566. Individual charges for
`those
`three components would already appear
`in
`the
`comprehensive list; the shoppable services list would group
`them together under the heading “colonoscopy.”
`
`To be sure, one could argue (as does the Association) that
`this is two lists. But one could also argue (as does the Secretary)
`that this is a single list displayed in two different ways.
`Contrary to the Association’s argument, the best reading of
`section 2718(e), in its entirety, permits the Secretary to require
`hospitals to display the information in multiple ways.
`
`
`
`
`
`
`
`13
`
`III.
`
`In support of its APA claim, the Association argues that
`the Secretary failed to adequately address the difficulties that
`hospitals face in compiling the information the rule requires,
`overestimated
`the
`rule’s benefits, and changed
`the
`interpretation of “standard charges” without adequate
`explanation. In considering these arguments, we are “not to
`substitute [our] judgment for that of the agency, but instead to
`assess only whether the decision was based on a consideration
`of the relevant factors and whether there has been a clear error
`of judgment.” DHS v. Regents of the University of California,
`140 S. Ct. 1891, 1905 (2020) (internal quotation marks and
`citation omitted). Moreover, and of special significance to this
`case, “when an agency’s decision is primarily predictive, our
`role is limited; we require only that the agency acknowledge
`factual uncertainties and identify the considerations it found
`persuasive.” Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1105
`(D.C. Cir. 2009).
`
`Feasibility and Administrative Burdens
`
`The Association advances two slightly different arguments
`
`under the umbrella of excessive burden. First, many negotiated
`rates are “unknown”—or even “unknowable,” as Association
`counsel insisted at oral argument—so complying with the rule
`is “impracticable, and often impossible.” Appellants’ Reply Br.
`24; Oral Arg. Rec. 8:36–9:10. Second, identifying each patient
`group’s negotiated rate for all items and services would require
`a “herculean effort.” Appellants’ Br. 54. Central to both
`arguments, hospitals often build algorithms based on complex
`contracts to calculate the applicable negotiated rate for a
`particular patient’s care. Id. at 53. Accordingly, the Association
`argues, many negotiated rates are determined only after the
`patient receives care and so cannot be disclosed beforehand.
`Relatedly, the Association argues that hospitals’ complex
`
`
`
`
`
`14
`
`pricing systems produce an “unlimited number” of “standard
`charges,” because possible permutations for identifiable patient
`groups are “infinite.” Id. at 27, 30.
`
`The Association’s arguments miss the mark. Consider two
`examples, one raised at oral argument and one offered by the
`Association in its brief. Patient A may have thought she needed
`only one x-ray, but she actually needed two; and instead of
`paying twice the amount of the first x-ray, the insurer paid only
`1.5 times that amount based on a volume discount. Patient B
`scheduled a hand nerve-repair surgery but ended up receiving
`tendon repair as well to correct a problem discovered during
`surgery; the insurer paid a discounted rate for the tendon repair
`because it occurred at the time of a related procedure. Whether
`and how much Patient A would be charged for the second x-ray
`and Patient B for the tendon repair was, as the Association
`emphasizes, “unknown” until after their treatments. The rule,
`however, does not require hospitals to disclose all possible
`permutations of costs based on hypothetical additional care or
`any other variable factor. It simply requires disclosure of base
`rates for an item or service, not the adjusted or final payment
`that the hospital ultimately receives based on additional
`See
`Price
`Transparency
`payment methodologies.
`Requirements, 84 Fed. Reg. at 65,550–51. So for Patient A, the
`rule requires disclosure of only the cost of one x-ray, and for
`Patient B, only the cost of a tendon repair procedure without
`any related procedures. Nothing in the rule requires the
`disclosure of discounts that may be applicable based on
`variable factors.
`
`The same principle applies to rates for diagnosis-related
`groups. Responding to comments, echoed here by the
`Association, that payer-specific charges cannot be identified
`for diagnosis-related groups because rates can change based on
`the patient’s condition or treatment plan, the rule makes clear
`
`
`
`
`
`15
`
`that the disclosure requirement applies to “the base rate that is
`negotiated by the hospital with the third party payer, and not
`the adjusted or final payment received by the hospital for a
`packaged service.” Id. at 65,547.
`
`This distinction between negotiated rates and final
`payments also addresses the Association’s contention that the
`rule fails to grapple with situations where no negotiated rate
`exists for a certain line item because “multiple items and
`services [are folded] into bundled rates for a particular
`procedure.” Appellants’ Reply Br. 25. In response to comments
`raising just this concern, the rule explains that hospitals must
`disclose only base rates that have been negotiated. Price
`Transparency Requirements, 84 Fed. Reg. at 65,551. In other
`words, nothing
`in
`the
`rule
`requires hospitals
`to
`“reverse-engineer” what negotiated rate they may have
`hypothetically reached in lieu of a bundled rate. Appellants’ Br.
`54.
`
`The same complex hospital billing systems and contracts
`
`drive the Association’s argument that the rule will saddle
`hospitals with “inordinately costly” burdens. Id. at 25.
`According to the Association, hospitals can have “thousands of
`agreements” with individualized subcontracts for each plan,
`with each contract featuring “dozens of pages of complex
`conditions and formulae.” Id. at 53. The rule, the Association
`complains, will require hospitals to “manually cull their
`contracts to identify each variable (location, inpatient versus
`outpatient setting, plan, etc.) and run each permutation,”
`resulting in thousands of different patient groups. Appellants’
`Reply Br. 26, 30. As a result, hospitals expect to spend much
`more time and resources—“orders of magnitude” more—to
`comply with
`the rule
`than
`the Secretary’s estimates.
`Appellants’ Br. 57.
`
`
`
`
`
`16
`
`In considering this argument, our job is to determine
`whether the Secretary “examine[d] the relevant data and
`articulate[d] a satisfactory explanation for [his] action.” Motor
`Vehicle Manufacturers Ass’n of the United States, Inc. v. State
`Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43
`(1983). The Secretary did just that.
`
`As the Association concedes, the rule acknowledges that
`hospitals use different payment methodologies and house
`information across different systems, making it challenging to
`consolidate the data into one comprehensive list. Appellants’
`Reply Br. 27; Price Transparency Requirements, 84 Fed. Reg.
`at 65,556. The rule also recognizes that due to the number of
`payers per hospital, hospitals may have many payer-specific
`charges to compile, and that they utilize “a variety of payment
`methodologies in their contracts” with insurers. Id. at 65,593.
`In response to commenters’ concerns, the rule clarifies that
`hospitals must disclose only base rates, delays the effective
`date by a year, and increases its burden estimate tenfold. Id. at
`65,550–51, 65,575–76, 65,592–93. The rule thus recognizes
`that hospitals are at “different stages of readiness to offer
`consumers transparent price information” and that “different
`hospitals may face different constraints when estimating their
`burden and resources required.” Id. at 65,593. Indeed, the
`resulting burden estimate for the implementation year—150
`hours per hospital location—is similar to the estimate provided
`by
`the Healthcare Financial Management Association
`(HFMA), which filed an amicus brief in support of the
`Association. To be sure, as the Association points out, the
`rule’s ultimate estimate is less than HFMA’s because, unlike
`that estimate, it declines after the first year and includes
`clinician time. In our view, however, the Secretary reasonably
`adjusted the estimate downward for subsequent years based on
`a perfectly sensible assumption that compliance costs will
`decline once hospitals start using “the business processes and
`
`
`
`
`
`17
`
`system infrastructures or software . . . built or purchased during
`the first year.” Id. at 65,596. That the Secretary arrived at an
`estimate thirty hours lower than an industry association’s
`calculation was hardly unreasonable given the wide range of
`estimates offered by commenters. Id. at 65,593–94, 65,595–96;
`see National Ass’n of Home Builders v. EPA, 682 F.3d 1032,
`1040 (D.C. Cir. 2012) (“[W]e do not review [the agency’s] cost
`figuring de novo, but accord [the agency] discretion to arrive
`at a cost figure within a broad zone of reasonable estimate.”
`(internal quotation marks omitted)). As the district court aptly
`put it, “[i]t can hardly be said hospitals’ concerns about their
`burden fell on deaf ears.” American Hospital Ass’n, 468 F.
`Supp. 3d at 389.
`
`Benefits
`
`The Association challenges the Secretary’s prediction that
`the disclosure scheme will advance the goal of “providing
`consumers with factual price information to facilitate more
`informed health care decisions.” Price Transparency
`Requirements, 84 Fed. Reg. at 65,544–45. Instead, the
`Association claims,
`the rule
`is
`likely
`to “misinform[]
`consumers”
`and
`“facilitate
`anticompetitive
`effects.”
`Appellants’ Br. 59, 62. But again, the Secretary “examine[d]
`the relevant data and articulate[d] a . . . ‘rational connection
`between the facts found and the choice made.’” State Farm,
`463 U.S. at 43 (quoting Burlington Truck Lines v. United
`States, 371 U.S. 156, 168 (1962)).
`
`As to efficacy, the rule points out that even though
`disclosure of negotiated rates alone will be insufficient to
`provide out-of-pocket cost estimates for many
`insured
`consumers, such rates are “a critical piece of information
`necessary
`for patients
`to determine
`their potential
`out-of-pocket cost estimates in advance of a service.” Price
`Transparency Requirements, 84 Fed. Reg. at 65,543. It then
`
`
`
`
`
`18
`
`explains that the disclosure scheme will provide out-of-pocket
`cost estimates for consumers without insurance and will be
`“highly beneficial for consumers in [high-deductible insurance
`plans] and in plans where the consumer is responsible for a
`percentage (that is, co-insurance) of the negotiated rate.” Id. at
`65,547. For example, a consumer who knows that her copay is
`twenty percent can estimate her out-of-pocket cost as twenty
`percent of the rate negotiated by the insurer. See id. The rule
`compares
`this outcome
`to
`the status quo,
`i.e., only
`chargemaster rates are publicly available and they apply to
`fewer than ten percent of patients, and concludes that the
`enhanced disclosure scheme will help more consumers. The
`rule also predicts that its disclosure scheme will enable
`researchers, government officials, clinicians, employers, and
`other third parties to “bring more value to healthca