CMS issues first fines for violating hospital price transparency law

The federal government has issued its first fines of a hospital system for failing to comply with a law requiring hospitals to be more transparent with their prices.

The Centers for Medicare and Medicaid Services has fined the Northside Hospital system in Atlanta more than $1 million for violating the requirements of the Hospital Price Transparency regulations. CMS fined Northside Hospital Atlanta $883,180, and it also fined Northside Hospital Cherokee, a sister hospital in Canton, Ga., $214,320. The penalties were assessed June 8.

Before issuing the penalties, CMS said it provided the hospitals with a written warning and a request for a plan to address the issue. The hospitals didn’t submit a corrective action plan and both hospitals “remain non-compliant with the Hospital Price Transparency regulations,” CMS said in an email to Chief Healthcare Executive Thursday.

Most hospitals aren’t fully complying with the law designed to give consumers more insight in health system prices, according to a new study that garnered national media attention this week.

CMS has issued more than 350 notices to hospitals “that have been determined by comprehensive review to be out of compliance with the Hospital Price Transparency regulations,” the agency said via email.

The agency has also issued 157 corrective action plan requests to hospitals that have received warning notices but have not yet corrected deficiencies. CMS said 171 hospitals have received case closure notices after having addressed previous citations.

The government is expecting hospitals to follow the law, Director of Medicare Dr. Meena Seshamani said in a statement.

“CMS expects hospitals to comply with the Hospital Price Transparency regulations that require providing clear, accessible pricing information online about the items and services they provide,” Seshamani said.

“This enforcement action affirms the Biden-Harris Administration’s commitment to making health care pricing information accessible to people across the country and we are committed to ensuring that consumers have the information they need to make fully informed decisions regarding their health care.”

Northside has 30 days to appeal the penalties in a hearing before an Administrative Law Judge of the U.S. Department of Health and Human Services’ Departmental Appeals Board.

A request for comment from Northside Thursday afternoon was not immediately returned.

The Hospital Price Transparency rule took effect in January 2021. At first, the penalty was $300 per day for all hospitals.

In January 2022, CMS instituted larger fines to spur more hospitals to adhere to the law.

CMS raised the penalty to a maximum of $5,500 per day. Over the course of a year, hospitals could be fined up to $2 million.

Only 6% of U.S. hospitals are fully complying with the federal law, according to a recent study, published June 7 by the Journal of the American Medical Association. The study examined data from hospitals between July 1 and September 30, 2021.

Hospitals are required to post information on different price types (including gross charges, discounts and payer-negotiated prices) in a machine-readable file. The law also directs hospitals to have separate price estimators or accessible displays for at least 300 items.

Among 5,239 hospitals, 729 facilities (13.9%) had a machine-readable file of different price types, but didn’t provide a shoppable display. In addition, 1,542 hospitals (29.4%) had a shoppable display of items, but no machine-readable file on price types.

Only 300 hospitals (5.7%) had both a readable file of price types and a display of shoppable items.

The study in JAMA noted that researchers examined hospital data months before CMS raised penalties.

A previous study in April found that less than half (44%) of 61 National Cancer Institute-designated cancer centers were releasing prices for commonly used cancer therapies. That study was published April 18 in JAMA Internal Medicine.