CMS Slaps First Hospitals With Fines for Lack of Price Transparency

This week, CMS handed down their first penalties to two hospitals in Georgia for failing to comply with the price transparency law that went into effect Jan. 1, 2021.

Northside Hospital Atlanta in Sandy Springs and Northside Hospital Cherokee in Canton were both fined for a lack of readily available standard charges for hospital services online, despite warnings.

As part of the Hospital Price Transparency Final Rule, items and services like supplies, room and board, and medical procedures must be posted online, in one machine-readable file that is “consumer-friendly” (e.g., services grouped together that are normally provided together). The two Northside hospitals had neither machine-readable files published digitally (specifically, their standard charges were not posted in a single file), nor were they in a “consumer-friendly” list.

The hospitals were fined $883,180 and $214,320, respectively, based on the number of days they were noncompliant with the law, and a set amount per hospital bed per day.

Both had previously received warning notices, requests for a “corrective action plan,” and received technical assistance calls and emailed recaps from CMS from May 2021 to January 2022, but did not take steps to post online price lists that met the requirements.

According to the letters from CMS to the hospitals, during the technical assistance calls, representatives from the hospital “confirmed that the previous violations had not been corrected and, in fact, the hospital system had intentionally removed all previously posted pricing files.”

In 2019, HHS established rules for hospitals to make their pricing more transparent, in an effort to give patients, employers, and clinicians the information to make better decisions about care. According to the final rule, “As healthcare costs continue to rise, healthcare affordability has become an area of intense focus.” Making hospital pricing available, they wrote, directly relates to lower healthcare costs.

“CMS expects hospitals to comply with the Hospital Price Transparency regulations that require providing clear, accessible pricing information online about the items and services they provide,” said Meena Seshamani, MD, PhD, deputy administrator of CMS and director of the Center for Medicare, in a statement. “This enforcement action affirms the Biden-Harris Administration’s commitment to making health care pricing information accessible to people across the country and we are committed to ensuring that consumers have the information they need to make fully informed decisions regarding their health care.”

The hospitals are far from alone in their lack of transparency, however. According to a JAMA analysis published this week, among 5,239 hospitals, 13.9% had a machine-readable file, 29.4% had a shoppable display of services and pricing, and 50.9% (2,668 hospitals) had neither. Only a sliver of hospitals — 5.7% — had both the machine-readable file and the list of services and prices 6 to 9 months after the rule went into effect.

Furthermore, a review of 1,000 U.S. hospitals by PatientRightsAdvocate.org estimated that only 14.3% of hospitals were fully complying with the transparency rule.

Hospitals in lower-concentration markets, more urban areas, and those with higher per-patient per-day revenue were more likely to be in compliance, the analysis found. Most had posted some standard charges, but 85.7% did not have a complete machine-readable file.

CMS has issued 352 warning notices to hospitals who were out of compliance, and 157 “corrective action plan” requests; 171 hospitals have addressed the citations and closed their cases, according to a CMS spokesperson.

With so many noncompliant hospitals to choose from, it’s unclear why CMS chose the Northside hospitals to fine first. CMS did not address this question in their emailed statement, and MedPage Today had not yet heard back from the Northside Hospital system for comment by the time of publication.

Both hospitals must pay the penalty within 60 days, but can appeal the civil monetary penalty decision by requesting a hearing within 30 days. If they don’t pay, the noncompliance fees will continue to accrue until the hospital corrects their pricing information and notifies CMS.