CMS proposes penalty increase for hospitals that fail to comply with price transparency rule

Photo: Westend61/Getty Images

The Centers for Medicare and Medicaid Services is proposing to increase the penalty for hospitals that do not comply with the Hospital Price Transparency final rule.  

CMS wants to set a minimum civil monetary penalty of $300 per day for smaller hospitals that have a bed count of 30 or fewer and apply a penalty of $10/bed/day for hospitals with a bed count greater than 30, not to exceed a maximum daily dollar amount of $5,500.  

The former penalty was a maximum of $300 per day.

Under this proposed approach, for a full calendar year of noncompliance, the minimum total penalty amount would be $109,500 per hospital, and the maximum total penalty amount would be $2,007,500 per hospital.

The action was released in CMS's Hospital Outpatient Prospective System and Ambulatory Surgical Center proposed rule for 2022.

WHY THIS MATTERS

CMS said it takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021.

Studies have shown that the majority of hospitals are not complying.

Just over 5% of hospitals are complying, according to PatientsRightsAdvocate.org.

A study in the Journal of the American Medical Association suggested that the cost of disclosure of negotiated rates could be greater than any fines.

CMS said it was enforcing President Biden's Competition Executive Order and holding hospitals accountable. Hospital price transparency helps Americans know what a hospital charges for the items and services they provide, CMS said.  

Based on information that hospitals have made public this year, there is wide variation in prices – even within the same hospital or the same system, depending on what each insurance plan has negotiated with the hospital, CMS said.

CMS said it is committed to ensuring consumers have the information they need to make fully informed decisions regarding their healthcare, since healthcare prices can cause significant financial burdens for consumers. 

Stacey Hughes, executive vice president of the American Hospital Association, said, "We will closely review the agency's regulations related to price transparency and advocate that any final policies meet this objective. However, we are deeply concerned about the proposed increase in penalties for non-compliance, particularly in light of substantial uncertainty in the interpretation of the rules."

THE LARGER TREND

The rule mandates that hospitals disclose their privately-negotiated rates with payers, but hospitals have argued that this price transparency gets consumers no closer to understanding what they will pay for their own treatment.  

It has survived numerous legal challenges.

Health plans are also being required to publish their negotiated rates with hospitals by publicly disclosing the rates they pay providers for specific services.

Sections of the rule go into effect on January 1, 2022, January 1, 2023, and January 1, 2024.

ON THE RECORD

"As President Biden made clear in his executive order promoting competition, a key to price fairness is price transparency," said HHS Secretary Xavier Becerra. "No medical entity should be able to throttle competition at the expense of patients. I have fought anti-competitive practices before, and strongly believe healthcare must be in reach for everyone. With today's proposed rule, we are simply showing hospitals through stiffer penalties: Concealing the costs of services and procedures will not be tolerated by this Administration."

"CMS is committed to addressing significant and persistent inequities in health outcomes in the United States and today's proposed rule helps us achieve that by improving data collection to better measure and analyze disparities across programs and policies," said CMS Administrator Chiquita Brooks-LaSure.

"We are committed to finding opportunities to meet the health needs of patients and consumers where they are, whether it's by expanding access to onsite care in their communities, ensuring they have access to clear information about health care costs, or enhancing patient safety."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com