Price Transparency Rule: First Penalties Issued

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Bryan Palmer

Director of Marketing and Business Development

Written on June 27, 2022

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Almost 18 months after the Centers for Medicare and Medicaid Services (CMS) new price transparency rule went into effect, the organization issued its first of many fines.

Hospitals are now required to provide a comprehensive machine-readable list of services as well as prices listed on their websites. This recent ruling affirms the government’s commitment to making it easier for consumers to shop and compare prices across health systems. Now, a consumer should be able to estimate the cost of care before going to a specific hospital for services.

Who was fined and how much?

An Atlanta-based hospital system was fined close to $1 million. CMS stated that neither a “consumer-friendly list of standard charges was found”, nor a machine-readable file.

CMS set a minimum CMP (Civil Monetary Penalty) of $300 a day for smaller hospitals with less than 30 beds. As well as a penalty of $10/bed a day for hospitals with 30+ beds. These are not to exceed a maximum daily dollar amount of $5,500. For a full year of noncompliance, the minimum to the max range for total penalties is $109,500 – $2,007,500 per hospital.

You can learn more by viewing this document for frequently asked questions from CMS’ website.

What does that mean for you?

images of price transparency

A recent study by the Journal of the American Medical Association shows that only about 14% of hospitals are fully complying with this new federal law.

If CMS concludes that your hospital is non-compliant it may take any of the following actions and stated that “generally but not necessarily will occur in the following order”.

  • Provide a written warning notice to the hospital of the specific violations
  • Request a Corrective Action Plan (CAP)
  • Impose a Civil Monetary Penalty (CMP)

If CMS issues a request for a hospital to submit a CAP, it must be submitted by the date specified in the request and must also…

  1. Specify the process the hospital will take to fix the issues
  2. List the timeframe by which the above will be completed

If a hospital fails to respond to CMS’ request to submit a CAP or comply with requirements, the organization may impose a CMP. 

CMS has already issued around 350 warning notices to hospitals that violate the ruling. If you did not receive a notice, but know that your system does not accurately display price information we suggest that your team, whether internally or with your digital partner, implement amendments to your digital properties as soon as possible. 

The Challenge

So, if this is such a big issue, why are only 14% of hospitals following the rule?

From a patient’s perspective, it’s simple, “quickly show me how much I’ll pay for x, y, and z”. However, it’s not so easy for a hospital to implement.

There are a handful of reasons why organizations may not be posting pricing fast enough. The biggest we see is discrepancies and variations in costs for patient A versus patient B, even if they both receive the same treatment.

In order to protect the hospital, each service will factor in a certain amount of risk (depending on the situation), and therefore, the “price tag” of a particular service could be elevated. Prices for services can also change frequently depending on when agreements with each payor start and end as well as factors like who is incurring the cost (employer, insurer, patient, etc). This requires consistent updating in order to keep the list up to par with CMS’ ruling.

How to follow the ruling?

Two ways to post standard charges:

1. ) Machine Readable File

A single machine-readable digital file that contains: gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.

2.) Consumer-friendly Display of Shoppable Services

Display all “shoppable services” with ancillary services and provide discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges. It’s crucial to note, that each of these services must also contain a plain language description.

To learn more about what exactly your hospital needs to provide, visit CMS’  help or resources page.

An ending note

In summary, many organizations are not investing beyond the bare minimum in price transparency requirements. 

If your team does not already have pricing listed on your website you’ll need to act quickly.