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October 14, 2021

CMS Begins Crackdown on Price Transparency Noncompliance: What Hospitals Need to Know

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Key Takeaways

  • As CMS begins to implement enforcement procedures, we outline the steps hospitals should take to understand the rules and become fully compliant.

Making hospital costs more transparent for patients and payors is one of the few truly bipartisan efforts undertaken by Congress in recent years. And now that the new rules are in full effect, the Centers for Medicare & Medicaid Services (CMS) is beginning to implement enforcement procedures on those hospitals that are still noncompliant.

The requirements from CMS officially went into effect on January 1, 2021, with the goal of making hospital pricing information clear for patients and allowing them to compare costs. CMS wants consumers to be able to make more informed healthcare decisions and access care from the provider that best suits their needs and budgets. And while it may be debatable whether or not this new rule will actually lead to patients knowing more about what their final bills will look like, hospitals are still required to post two pieces of information on their websites:

  1. A machine-readable file with standard charges for all items and services provided by the hospital, including gross chargesdiscounted cash pricespayor-specific negotiated charges, and de-identified minimum and maximum negotiated charges.
  2. The prices of 300 "shoppable services" that a healthcare consumer typically schedules in advance, displayed in a consumer-friendly format. These prices also must include plain language descriptions of the services and group them with ancillary services, and provide the discounted cash pricespayor-specific negotiated charges, and de-identified minimum and maximum negotiated charges.

Risks of Fines and Bad PR Rise as CMS Kicks Off Crackdowns

Though it's been more than six months since the rule went into effect, plenty of confusion and complexity around the rules still exists for many hospitals. As a result, many have yet to fully comply, with one study from March 2021 showing that more than 81% of hospitals are still in some way noncompliant.

To encourage greater compliance, CMS began issuing warning letters in May to hospitals that have not yet posted the critical pieces of information to their websites. These hospitals will have a 90-day grace period to correct issues addressed in these letters. Following the 90-day period, CMS will review the hospital again, and, if it is still noncompliant, the hospital may receive a second warning letter or be sent a request for a corrective action plan. Any noncompliant hospital that has not yet received a warning letter, may receive a warning letter sooner rather than later.

Civil penalties may also be assessed for noncompliance. And while these fines may be small for some hospitals (up to $300 per day), the risk of negative publicity for failure to comply and deliver price transparency to patients and payors may be more severe. Beyond publicizing the penalty on the CMS website, news headlines calling out individual hospitals and health systems are already making waves.

Implementing a Corrective Action and Compliance Plan

Now is the time for noncompliant hospitals to take direct action to understand the rules and become fully compliant as soon as possible. It's critical for any hospital that has received a warning letter to know what to do, how to address it, how to manage CMS audits, and how to notify the government that the issue has been corrected.

The attorneys and government relations professionals at Buchanan Ingersoll & Rooney have decades of experience helping healthcare providers comply with CMS, the Department of Health and Human Services (HHS), and other governmental agencies. Let us help you understand where your risks are and how to ensure your organization is in full compliance with these new rules and regulations.

For more information on Buchanan's healthcare practice, visit www.BIPC.com/healthcare

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