CMS is preparing to make noncompliance with price transparency requirements much more expensive

A hospital with at least 550 beds would owe more than $2 million in penalties for a year of noncompliance with current price transparency requirements, according to a proposed rule.

Price transparency compliance stands to have higher financial stakes in 2022, as a newly proposed rule from CMS makes clear.

Proposed 2022 regulations for the Outpatient Prospective Payment System include tougher penalties for violating price transparency mandates that took effect this year. Namely, the $300 per day penalty for noncompliance would rise significantly for larger hospitals.

The $300 rate would remain for hospitals with 30 or fewer beds. The penalty would rise by $10 per day for each additional bed, with a maximum allowable penalty of $5,500 per day. In other words, hospitals would not be subject to an incrementally higher penalty for bed counts beyond 550.

Thus, for hospitals that remain noncompliant for an entire year, the penalty would range from $109,500 to slightly more than $2 million.

Medicare cost reports would be the source for determining bed counts. If a cost report isn’t available for a noncompliant hospital, CMS would seek other documentation. If the documentation is not forthcoming, CMS would assume the hospital has 550 beds and penalize it accordingly.

“CMS is seeking comment on alternative or additional criteria that could be used to scale a CMP [civil monetary penalty] such as: hospital revenue; the nature, scope, severity and duration of noncompliance; and the hospital’s reason for noncompliance,” according to a fact sheet on the proposed rule.

The American Hospital Association expressed concern that the new penalties would be excessive.

“Hospitals and health systems are committed to helping patients access the information they need to make decisions about their care, including financial information,” Stacey Hughes, AHA executive vice president, said in a statement. “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 noncompliance, particularly in light of substantial uncertainty in the interpretation of the rules.”

Since the transparency mandates were implemented Jan. 1, various reports have arisen regarding widespread noncompliance. Most recently, PatientRightsAdvocate.org reviewed a random sample of 500 hospitals and found that 94.4% were noncompliant.

The new rule follows a recent executive order from President Joe Biden, who sought to promote competition across industries. Among the edicts pertaining to healthcare was a directive for the U.S. Department of Health and Human Services to ramp up enforcement of price transparency.

“We are simply showing hospitals through stiffer penalties: Concealing the costs of services and procedures will not be tolerated by this administration,” HHS Secretary Xavier Becerra said in a statement.

Additional updates to price transparency compliance requirements

By way of review, hospitals are required to make the following information readily available on their websites:

• A single machine-readable digital file containing the following standard charges for all items and services provided by the hospital: gross charges, discounted cash prices, payer-specific negotiated charges and de-identified minimum and maximum negotiated charges.
• A display of at least 300 “shoppable services” (or as many as the hospital provides if less than 300) that a healthcare consumer can schedule in advance. The information must contain plain-language descriptions of the services and group them with ancillary services, and provide the discounted cash prices, payer-specific negotiated charges and de-identified minimum and maximum negotiated charges.

The newly proposed regulations amount to a response to reports (login required) that some hospitals have blocked access to the required machine-readable file. Specifically, compliance would entail ensuring that the file is accessible to automated searches and direct downloads.

“In some cases, it appears that hospitals have made standard charge data available online but embedded it in websites without any ability for users to easily or directly download a ‘single machine-readable file,’” the proposed rule states. “In other cases, hospitals have posted a link to a single machine-readable file but have, either intentionally or unintentionally, placed barriers that make it more challenging for the public find and access the file and its contents.”

For organizations that choose to make price estimator tools available as an alternative to posting standard charges for 300 shoppable services, CMS now clarifies that the tool “must provide a cost estimate to an individual that takes the individual’s insurance information into account, and that the estimate reflects the amount the hospital anticipates will be paid by the individual for the shoppable service, absent unusual or unforeseeable circumstances.”