Fewer warnings, automatic fines: Hospitals could see tougher rules on price transparency

The federal government has required hospitals to be more transparent with their pricing policies, but regulators have only issued a handful of fines to violators to date.

The Centers for Medicare & Medicaid Services proposed tougher rules for hospitals that aren't complying with federal rules on price transparency. (Image credit: BUSARA - stock.adobe.com)

However, the government appears to be ready to take a tougher approach.

This week, the Centers for Medicare & Medicaid Services issued proposals for hospitals to correct problems, and the proposals call for a shorter window to address deficiencies before being fined.

The CMS said in a fact sheet that the agency is proposing to issue fines “earlier and automatically” for failing to comply in some instances.

The agency is also proposing a 90-day window for hospitals to come into compliance when they are notified they are violating federal rules on price transparency.

The CMS proposes to issue fines if hospitals fail to submit a corrective action plan within 45 days of being notified they are not complying with transparency regulations. Hospitals can also face automatic fines if they fail to come into compliance within 90 days of being notified they are violating transparency regulations, CMS says.

In addition, the CMS says it is streamlining the compliance process.

In the past, the agency would send a warning notice if they determined a hospital isn’t making efforts to comply with the rules. Now, CMS says it will no longer issue warning notices but will immediately direct hospitals to submit a corrective action plan.

Under the regulations, hospitals are required to have lists of shoppable services or tools to estimate prices, or some type of machine-readable file.

As of April 2023, the CMS says it has issued more than 730 warning notices and 269 requests for corrective action plans for violations of hospital price transparency regulations.

To date, the CMS has issued four fines to hospitals for violations of transparency rules, and two of those penalties were issued just this month.

The CMS issued a fine of $102,660 to Frisbee Memorial Hospital in New Hampshire this month. In an April 19 letter, CMS said it determined the hospital has been non-compliant since Oct. 24, 2022.

Also on April 19, the CMS fined Kell West Regional Hospital in Texas $117,260 for not complying with regulation on hospital transparency. In a letter to the hospital, CMS said the hospital hasn’t been in compliance since July 8, 2022.

In June 2022, the CMS 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, 2022.

In 2022, 70% of hospitals were complying with federal price transparency regulations, up from 27% in 2021, according to the CMS.

The American Hospital Association has said that hospitals are working to adhere to the federal rules on price transparency. In 2022, 82% of hospitals fulfilled the requirement of having a consumer-friendly display of services, up from 66% in 2021, the AHA noted earlier this year.

Patient and consumer advocates have repeatedly criticized hospitals and health systems for failing to offer clear information on prices in ways that consumers could easily understand and use.

Federal officials suggested earlier this year that more aggressive measures would be coming regarding hospital price transparency.

Meena Seshamani, the deputy administrator & director of the Center for Medicare, and Douglas Jacobs, the chief transformation officer in the Center for Medicare, outlined the possibilities in a Feb. 14 essay in Health Affairs Forefront.

“CMS is also exploring how to streamline enforcement efforts, including expediting the timeframes by which it requires hospitals to come into full compliance upon submitting a corrective action plan,” the CMS leaders wrote. “CMS also plans to take aggressive additional steps to identify and prioritize action against hospitals that have failed entirely to post files.”

In the Health Affairs essay, CMS officials acknowledged that some information isn’t easily accessible to consumers. They said some hospitals are complying with the regulations but are posting large files that people can’t easily use.

“While a hospital may be complying with CMS’ requirements, it still may be challenging for an individual to find hospital pricing information that is useful and there is opportunity to improve,” they wrote.