CMS steps up hospital price transparency enforcement

With the implementation of the Hospital Price Transparency final rule, Congress and the Centers for Medicare & Medicaid Services (CMS) hoped to usher in a new era of openness relating to the amounts hospitals charge individuals and various third-party payers of healthcare items and services in the United States.

Beginning January 1, 2021, hospitals were required to make public their charges for all hospital items and services. Since that time, CMS has slowly increased enforcement of the transparency requirements, issuing the first civil monetary penalties (CMPs) against two hospitals in June 2022, and more recently, issuing CMPs against two additional hospitals on April 19, 2023.

This update identifies the major change in increased enforcement that hospitals should note as they review their compliance with the hospital price transparency rule.  Notably, the deadlines and ability for hospitals to manage noncompliance have become more harsh and opportunities to manage risk prior to the issuance of CMPs has been eliminated.

On April 26, 2023, CMS Administrator Chiquita Brooks-LaSure testified before Congress that as of April 2023, CMS “has issued over 730 warning notices and 269 requests for corrective action plans.” On the same day, CMS announced hospital price transparency enforcement updates, including a more aggressive enforcement posture. The CMS updates include:

• Deadline adjustments for implementation of a corrective action plan (CAP);
• Imposition of automatic CMPs for noncompliance with the hospital price transparency requirements; and
• An end to warning notices for hospitals that have made no attempt to comply with the hospital price transparency requirements.

Hospital price transparency requirements

The CMS hospital price transparency rule requires hospitals located in the United States to make “standard charges” public, consistent with Public Health Service Act § 2718(e).

The term “standard charges” covered by the Act include: (1) gross charges, which involve a list of items and services for which a hospital has established a charge; (2) discounted cash prices, which involve charges applicable to individuals who pay cash or cash equivalent for items of services; and (3) charges that have been negotiated between a hospital and third-party payors.

The statute requires that standard charges be made available to the public through: (1) a comprehensive file with all standard charges for the hospital, and (2) a consumer-friendly format with at least 300 services either provided through (a) a shoppable services file, or (b) a price estimator that estimates out-of-pocket costs for an individual based on their insurance information.

Hospital price transparency enforcement

CMS enforces the hospital price transparency requirements through review of public complaints, individual or entity reports of noncompliance, and audits of hospital websites. During its inception, CMS delayed enforcement and made allowances for hospitals to transition to this new set of requirements, in response to industry comments.

By way of review regarding the enforcement requirements, recall that if CMS finds that a hospital is noncompliant, CMS will issue a warning notice with instructions to achieve compliance within a 90-day period, initially. If the hospital, thereafter, fails to become complaint within the 90-day period, CMS will provide the hospital with a request for submission of a CAP within 45 days of receipt of the request.

Previously, the hospital would propose a completion date for when the hospital anticipated that it would be able to fully implement the CAP, which typically ranged from 30 to 90 days. With the recent update, the time period for implementation of a CAP is now set at 45 days (see additional information related to this update below). 

If a hospital does not complete the necessary steps to become compliant, CMS will issue a CMP, which can range from US$300 per day for hospitals with 30 or fewer beds, and US$10 per bed per day for hospitals with greater than 30 beds, up to a fine of US$5,500 per day. See 45 CFR § 180.90(c)(2).

CMS hospital price transparency enforcement updates

• CAP deadline updates: In the event CMS issues a CAP request to a hospital, the hospital will still have a 45-day period to provide CMS with its CAP. Note here that hospitals will no longer have the ability to propose their own timeline for implementation of their CAP. Instead, CMS will require hospitals to achieve full compliance within 90 days of CMS’s issuance of the CAP request.
• Imposition of automatic CMPs: In the event a hospital does not provide CMS with a requested CAP within 45 days and remains noncompliant, CMS will issue automatic CMPs. If a hospital submits a CAP but does not achieve full compliance within 90 days of the request for the CAP, CMS will issue automatic CMPs.
• Elimination of warning notices in certain cases: CMS will no longer issue warning notices to hospitals that have not made any attempt to comply with the hospital price transparency requirements. Instead, CMS will request a CAP without a warning notice.

Implications for hospitals

These updates will mean shortened time periods for hospitals to achieve full compliance with the hospital price transparency requirements, with only 180 days for instances where a warning notice is provided and 90 days for instances where no warning notice is provided.

Further, these updates will mean harsher consequences for hospitals that do not submit a CAP within 45 days or do not achieve compliance within the 90-day period through the imposition of automatic CMPs.

Hospitals that have not made any attempt to comply with the hospital price transparency requirements will also face harsher consequences, as the elimination of the warning notice will mean an abbreviated period for these hospitals to achieve full compliance, from 180 days to just 90 days.

For additional information, please contact the Norton Rose Fulbright team listed below.