Hospitals, medical groups push back against penalties for information blocking

The federal government wants to encourage the exchange of health information between hospitals, medical groups, and payers, with the goal of improving patient care.

Hospitals and medical groups are urging the federal government to reconsider proposed penalties for information blocking. (Image: @alswart - stock.adobe.com)

But hospitals and medical groups are warning that proposed penalties for blocking information are too harsh, and could be especially damaging to smaller providers. Depending on the situation or size of the institution, the penalties could reach hundreds of thousands of dollars.

The American Hospital Association and the Medical Group Management Association have both urged the Centers for Medicare & Medicaid Services to reconsider the planned penalties.

“The disincentive structure proposed in this rule is excessive, so much so that it may threaten the financial viability of economically fragile hospitals, including many small and rural hospitals,” Ashley Thompson, the AHA’s senior vice president of public policy, wrote in a letter to CMS.

Under the proposal introduced last fall by the Office of the National Coordinator for Health Information Technology, a division dubbed “ONC”, organizations would see “disincentives” for blocking access to health information.

ONC officials have said the government’s expectation is for providers and payers to freely exchange information, so patients and caregivers can be better informed and more involved with their healthcare. The exchange of information enables better care for patients who are sent home from the hospital, or for those traveling and need treatment in other states.

Hospitals and providers could see reduced Medicare reimbursements if they are found to be blocking information. The AHA notes for hospitals, they would receive a 75% reduction in their annual “market basket”, or the price index used to help set Medicare’s inpatient payments each year. Critical access hospitals could see reimbursements reduced by a percentage point, the AHA says.

Under the government’s proposals, hospitals could see a median “disincentive amount” of $394,353 and a range of roughly $30,000 to $2.4 million across eligible hospitals.

But some hospitals say their estimates, using the government’s proposals, could lead to even higher penalties. Some hospitals estimated “an average impact that is nearly 10 times higher than median quoted in the rule,” Thompson wrote in the letter.

The hospital association also says a 1% cut in reimbursements to rural hospitals would be “very challenging.”

The AHA faults tying disincentives to payment indexes that change from year to year, which the association says will add to confusion for hospitals and potentially lead to disproportionate penalties.

The MGMA says it understands a need for disincentives, but says in a letter to CMS, “We harbor significant concerns with the proposed rule and its impact on medical groups.”

In its letter to the government, the MGMA suggests the government should employ corrective action plans “to effectively remedy information blocking allegations instead of significant financial penalties.” The MGMA says that would be more effective than spurring providers to abandon participation in Medicare.

ONC estimates that the median “disincentive” for a clinician would be $686. Groups with two to 241 clinicians could see penalties ranging from $1,372 to $165,326.

Both the AHA and MGMA are also pushing the government for a more defined process to appeal penalties.

The hospital association says the government should be providing more information about what constitutes information blocking that could lead to penalties from the Office of Inspector General.

Since April 2021, when ONC began tracking reports, there have been 869 possible claims of information blocking. Most of those involve patients trying to get their health information.

The MGMA says the government should provide more clarity on what could lead to penalties and have the chance to address deficiencies. “Guidance and education would be invaluable not only to offending parties, but to prevent information blocking before it occurs,” the group said.

The AHA and MGMA are urging the government to delay moving forward with the proposal. The hospital association is also seeking additional time for review of the proposal, and suggests the government refrains from enforcing penalties until 18 months after publication of the final rule, to give providers more time to prepare and be aware of the regulations.

The federal government is making it clear that it expects to see the exchange of patient information across the different players in the healthcare industry.

In December, federal officials hailed the launch of the Trusted Exchange Framework and Common Agreement (TEFCA), the interoperability framework will advance the exchange of health information between hospitals, healthcare organizations, insurers and patients.