Hospital price transparency: Feds suggest more ‘aggressive’ steps could be coming

Most hospitals are meeting federal requirements for disclosing their prices, but federal officials say they’re considering more aggressive steps for organizations that are falling short.

In 2022, 70% of hospitals were complying with federal price transparency regulations, up from 27% in 2021, according to officials with the Centers for Medicare & Medicaid Services. CMS leaders outlined the progress on hospital price transparency in a Feb. 14 essay in Health Affairs Forefront.

Meena Seshamani, the deputy administrator & director of the Center for Medicare, and Douglas Jacobs, the chief transformation officer in the Center for Medicare, wrote the essay. They said they are encouraged by the steps hospitals have made.

Still, they noted that hundreds of warning letters have been sent to hospitals to address deficiencies. While they noted that most of those issues were corrected, the CMS leaders wrote that the agency is considering other steps to ensure greater compliance.

“All hospitals must fully comply with the law,” they wrote. “CMS is exploring additional policies to accomplish this as well as examining ways to make health care pricing information more usable for consumers.”

CMS is considering speeding up the clock to get hospitals to correct problems and comply with transparency rules.

“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.”

As of January 2023, CMS issued nearly 500 warning notices to hospitals, and more than 230 requests for corrective action plans, Seshamani and Jacobs wrote. Nearly 300 hospitals have since made changes and are now in compliance with the federal rules, closing their cases, they wrote.

To date, CMS has issued only two fines for violations, and both were to the same system.

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.

The Hospital Price Transparency rule took effect in January 2021. At first, the rule called for a maximum penalty of $300 per day for all hospitals, or $100,000 annually.

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 more than $2 million.

To comply with the federal rules, hospitals must provide consumers with a display of at least 300 shoppable services, either through a shoppable services file or a price estimating tool. Hospitals must offer a comprehensive, machine-readable file.

Patient and consumer advocates have long criticized hospitals and health systems for failing to disclose prices in ways that consumers can easily access and digest. Patient Rights Advocate released a report earlier this month that found 24.5% of hospitals are fully complying with the Hospital Price Transparency Rule.

The American Hospital Association says that hospitals are working to adhere to the federal requirements. In 2022, 82% of hospitals fulfilled the requirement of having a consumer-friendly display of services, up from 66% in 2021, the AHA noted. And 82% of hospitals now offer machine-readable files, up from 30% in 2021.

“These numbers show significant progress on the part of hospitals implementing these requirements and are unsurprising given the unprecedented challenges hospitals continued to face in 2021 with respect to the COVID-19 pandemic and workforce crisis,” AHA officials wrote in a blog post.

As the hospital association notes, CMS is ultimately the agency that will determine compliance with transparency on prices. And so far, CMS has been reluctant to be too punitive. The agency is working with hospitals that are working to follow the rules.

But in the Health Affairs Forefront piece, CMS officials appear to be sending a message that tougher measures may be coming for those that aren’t complying or making a substantial effort.

Stakeholders continue to note that some patients can’t find pricing information because it’s posted in different locations on providers’ websites. The CMS officials said it’s possible that the transparency rule may be modified to ensure pricing information is centrally located or more easily visible on the hospital’s website.

Seshamani and Jacobs also note that even in cases where hospitals may be meeting the federal standards, it may still be difficult for consumers to examine prices. They noted some hospitals may be in compliance but are posting large files that people can’t easily access.

“These examples illustrate that 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.