CMS Plays Hardball with Hospital Price Transparency Enforcement Updates

The Centers for Medicare and Medicaid Services (CMS) announced on April 26, 2023, that it would be updating its enforcement processes for the Hospital Price Transparency regulations. These updates would drastically shorten timelines and impose automatic penalties when hospitals failed to meet compliance deadlines.

The Hospital Price Transparency rule (Rule) went into effect on January 1, 2021, and it sought to combat the issue of opaque pricing of hospital services for consumers. The Rule required that hospitals publish information regarding their pricing so that consumers would be able to understand the potential cost of services. This, in theory, should allow consumers to understand the potential price and enable cross-shopping hospitals for services they need.

Hospitals are required to make public their “standard charges” which encompass information such as their gross charges as found in the hospital chargemaster, discounted cash prices offered to individuals who pay cash or cash equivalent, and charges negotiated between the hospital and third-party payers. Hospitals are required to make this information public by providing a machine-readable file with all standard charges for all items and services the hospital provides, as well as a consumer-friendly display of standard charges.

CMS monitors compliance with the Rule through three main avenues:

1. CMS evaluates complaints made by the public regarding the lack of price transparency provided by the hospital;
2. CMS reviews individuals’ or entities’ analysis of noncompliance;
3. CMS’s own internal audits of hospital website.

When conducting its review, CMS prioritizes those hospitals with the most egregious violations. The current enforcement process consists of a warning to correct deficiencies within 90 days. If the deficiencies are not correct, CMS issues a request for the hospital to submit a Corrective Action Plan (CAP) within 45 days of the request. Once approved, hospitals are further required to submit a proposed completion date for when compliance with the Rule will be achieved. If the hospital has not come into compliance by its proposed completion date, CMS will issue a Civil Monetary Penalty. This process takes 195-220 days on average. Since enacting the rule, CMS has issued 730 warning notices and 269 requests for CAP, with Civil Monetary Penalties imposed on four hospitals for noncompliance.

On April 26, CMS announced that it is ratcheting up its enforcement efforts by shortening the process and issuing Civil Monetary Penalties earlier and automatically. First, CMS is standardizing the CAP completion deadlines, requiring hospitals to be in full compliance with their CAP within 90 days of the CAP request. Second, CMS will begin imposing automatic penalties for hospitals that fail to meet CMS’s deadlines. Should hospitals fail to submit their CAP within the 45-day deadline, or fail to come into compliance with the Rule within the 90-day deadline, CMS will impose automatic Civil Monetary Penalties. Finally, CMS will no longer be issuing warning notices to hospitals that have not made any attempt to satisfy the requirements of the Rule. Instead, hospitals will be met with a request to submit a CAP to CMS, which is subject to the above-mentioned automatic penalties.

Overall, this will drastically shorten the amount of time hospitals will have to respond to enforcement actions related to compliance with the Rule. The timeline has shortened from a potential 225-day timeframe to a mere 90 days for hospitals that are not in compliance with the Price Transparency Regulation. This timeframe carries significantly more weight given CMS’s stated intention to automatically impose Civil Monetary Penalties for missed deadlines.