FTC Issues Letters Warning Hospitals Against Deceptive Pricing Practices

Federal Trade Commission Chairman Andrew N. Ferguson today sent letters to 24 of the nation’s largest healthcare services companies, reminding them of their legal obligation to provide patients with timely, accurate and complete pricing information for healthcare services, and that failing to do so can be an unfair or deceptive practice. 

The letters sent today are part of the Trump FTC’s ongoing commitment to promote healthcare affordability and price transparency for consumers. 

The letters highlight concerns that healthcare services companies may violate the FTC Act by failing to provide transparent price information, particularly for routine and non-emergency medical care scheduled in advance.

Healthcare is among the largest and most consequential expenses American families face, yet patients are routinely asked to commit to care without knowing what it will cost and with prices for the same service often differing dramatically from one facility to the next. When patients are not told the true price in advance, the letters explain, both consumers and competition suffer. This also means patients cannot comparison shop or make informed decisions, and providers that deal honestly and transparently are put at a competitive disadvantage.

The letters emphasize that the Centers for Medicare & Medicaid Services’ price transparency rules establish a critical baseline for ensuring that healthcare facilities provide pricing information. However, compliance with these CMS requirements does not mean that a healthcare facility has met its obligations under Section 5 of the FTC Act. The CMS rules do not create a safe harbor from FTC Act liability. 

Because price is a material term, the letters state, clear and conspicuous disclosures are often needed. Failing to disclose the price of a healthcare service may be deceptive if the omission is likely to mislead consumers acting reasonably under the circumstances. And when a disclosure is made, it may still be deceptive if it is incomplete, such as when it omits physician or facility fees or covers only a portion of the expected course of care. This is so because patients may reasonably believe they have been told the total cost of their care. Inaccurate disclosures are likewise misleading.

Failure to provide transparent pricing may also be unfair under Section 5 if it causes or is likely to cause substantial injury that consumers cannot reasonably avoid and that is not outweighed by countervailing benefits to consumers or competition. For example, when price information is incomplete, inaccurate or not provided sufficiently in advance for scheduled services, consumers cannot compare competing healthcare providers’ services or make informed decisions. Nor do incomplete, inaccurate or untimely pricing disclosures (where that information is reasonably available to the healthcare provider in advance) provide any countervailing benefits to competition or consumers. On the contrary, this practice undermines competition by obscuring one of the most important dynamics of competition from consumer observation and comparison.

Chairman Ferguson urged the healthcare services companies to conduct a comprehensive review of their price disclosure practices and take swift corrective action as needed. 

The FTC has prioritized investigating and prosecuting deceptive and unfair practices in the healthcare industry, including through Chairman Ferguson’s creation of the Healthcare Task Force earlier this year. Last week, the FTC sued online contact lens providers Lens.com for misrepresenting the price of contact lenses in search ads and on its website.