Hospital price transparency updates include stricter enforcement, new fines and pending legislation

(Note: The last section of this article was updated May 24 where noted to reflect developments in Congress.)

Enforcement of hospital price transparency regulations is becoming stricter, with CMS implementing new policies and recently fining two hospitals.

Changes were anticipated after CMS leaders authored an article in February that reported 70% compliance in 2022, the second year of the regulations. Although that rate represents a significant improvement from the first year, “it is not sufficient,” the article states.

Among the changes outlined in a fact sheet is implementation of a firm 90-day window for coming into full compliance from the time CMS issues a request for a corrective action plan (CAP).

Hospitals continue to have 45 days to submit a plan after CMS identifies ongoing deficiencies and requests a CAP. Taking the full allotment would leave only 45 more days to make sure they’re fully complying, with civil monetary penalties levied for missing the deadline. Previously, when filing their CAP, hospitals could propose their own schedule for ensuring compliance.

“This change will standardize and streamline the time frame and promote compliance at earlier dates,” CMS wrote.

Hospitals also can expect penalties to become routine for failing either to submit a CAP within 45 days or to come into compliance within 90 days of the CAP request.

And for any hospitals that appear to have made little effort to comply to begin with, CMS likely will skip issuing a preliminary warning notice and instead move right to the CAP request.

More penalties handed down

A small for-profit hospital in New Hampshire was fined $102,660 in April, while a physician-owned hospital in Texas received a penalty of $117,260. They are the third and fourth organizations to be fined, joining the two hospitals from the same system in the Atlanta area that were penalized in 2022.

In one of the new cases, the 58-bed New Hampshire hospital did not fulfill a request to submit a CAP within 45 days, according to CMS correspondence. The agency said it made multiple attempts to contact the hospital after the 45-day window expired.

The penalty encompasses a 177-day period dating back to October, when CMS reviewed the hospital’s machine-readable file following a preliminary warning notice that was issued more than a year prior.

In the other recent case, the 41-bed Texas hospital submitted a CAP as requested but did not fix the issues by the approved deadline. The penalty is for a 286-day noncompliant period.

Penalties start at $300 per day for hospitals with no more than 30 beds and increase by $10 per day for each bed above 30. The maximum daily penalty is $5,500 (for hospitals with 550 or more beds).

Both hospitals can appeal their fines before an administrative law judge. Both also are subject to additional penalties if they do not correct the issues.

The two hospitals that were fined in 2022 came into full compliance soon thereafter — and that’s even according to a report by PatientRightsAdvocate.org, an advocacy group that assesses compliance using apparently stricter standards than what CMS intended.

Congress looks to act

A bill developed by the bipartisan leadership of the House Energy & Commerce (E&C) Committee, Reps. Cathy McMorris Rodgers (R-Wash.) and Frank Pallone (D-N.J.), would throw the weight of federal legislation behind the price transparency push.

“Our bill has been years in the making, and it’s a culmination of a lot of bipartisan work and discussions to bring price transparency to the forefront,” McMorris Rodgers said during an April 26 hearing of the E&C Committee’s Health Subcommittee.

On May 17, the subcommittee advanced the bill to the full committee for consideration, putting it a step closer to becoming law. (Update: On May 24, the E&C Committee unanimously approved the bill as part of a larger package, setting it up for a House chamber vote. The timing of any such vote remains to be determined.)

With the House Ways and Means Committee conducting its own hearing on price transparency in May, the issue is a congressional healthcare priority. The main concern appears to be improving enforcement and giving hospitals more incentive to comply.

The E&C legislation would take effect in 2024, with a uniform format and method required for reporting price information as of 2025. Penalties for violators would be similar to their current rates, but the fine for a facility with more than 30 beds automatically would be bumped up to $5 million if the organization goes a full year without complying. Based on the daily rate, the maximum one-year fine under the current rules comes out to slightly more than $2 million for the biggest hospitals.

(Update: The bill also removes the penalty cap of $5,500 per day for large hospitals starting with violations that take place in 2024. A hospital with more than 550 beds would owe greater penalties, with the rate continuing to increase at $10 per bed.)

Hospitals also would face the prospect of greater exposure for noncompliance. Those that receive a CAP request or even a preliminary warning notice would be named publicly along with those that are penalized. Compliant hospitals also would be listed. (Update: The latest version of the bill left out the provision to include compliant hospitals on the list.)

There also would be a push to include quality-related data alongside prices, with the U.S. Department of Health and Human Services required to conduct a request for information by 2025 on the appropriate parameters.

In testimony at the subcommittee hearing, Ashley Thompson, senior vice president for public policy analysis and development with the American Hospital Association, indicated hospitals would support the bill.

“Hospitals are eager to continue their compliance efforts,” she said.

Insurers also included

The bill also updates regulations for insurer price transparency, including by requiring compliance as a condition of a health plan’s participation in the Affordable Care Act marketplaces.

Plans operating in the marketplaces would need to make available the in-network rate and maximum out-of-network payment for all items and services, along with beneficiary cost sharing, a tracker showing a beneficiary’s accumulated deductible payments for the year, and prior authorization policies for each item or service.