June 15, 2022

“He keeps his cards close to the vest.”  The familiar adage describes a person who is, by his very nature, not normally disposed to trumpeting his business through the streets.  All of us, to one degree or another, are prone to privacy; and, while we prefer complete openness and transparency from those with whom we regularly associate, we often opt to post a “no trespassing” sign when it comes to certain areas of our own lives.

So, while total transparency is a noble ideal, is it realistically obtainable?  Is it really possible to persuade our associates, our businesses and our government to be completely above board and candid—even where such openness may be embarrassing or otherwise disadvantageous to the disclosing party?  That’s what the federal government is, in part, asking hospitals to do.

Background of the Rule

In 2019, the Centers for Medicare and Medicaid Services (CMS) issued a final rule requiring hospitals to publicly disclose five types of charges for items and services, to include negotiated rates with payers.  The final rule also instructed hospitals to publish charge information relative to a number of services that patients can schedule in advance.  The government believed this stipulation would create competition in the healthcare marketplace by allowing consumers to compare prices.

Of course, whenever the feds issue a regulation, there are consequences for those who fail to follow it.  In the initial final rule, CMS set the maximum annual penalty for noncompliance at $109,500 for “large hospitals.”  Since then, the agency has increased the penalty to more than $2 million per hospital, starting in 2022. 

As most of our readers know, hospital executives and hospital lobbying organizations were vehemently opposed to these regulations and penalties when they were first proposed, and a lawsuit was filed with the objective of overturning the final provisions.  That legal action, however, ultimately proved unsuccessful.  Nevertheless, despite these rules and penalties being affirmed by the court system, and despite a demonstrably large number of hospitals across the country failing to comply with the disclosure regulations thus far in 2022, CMS has been reticent to issue fines—that is, until now.

The First to Fall

Regulators at CMS have levied fines this month against two Georgia-based hospitals, which we will not name.  However, they were both part of the same health system and were fined $883,180 and $214,320, respectively.  According to health news aggregator HealthcareDive, the facilities could face additional civil monetary penalties if they don’t comply, based on comments by CMS officials.  In a letter from CMS, the facilities were put on notice:

Should your hospital fail to notify the CMS that all noncompliance have been corrected, a CMP will continue to accrue until the date the CMS reviews your website and determines your hospital is in full compliance.

It is notable that, prior to fines being assessed, CMS sent warning letters to both facilities, requesting corrective action.  The letters, dated last week, detailed the alleged violations of the Georgia entities, “including failures from both hospitals to post a comprehensive list of standard charges,” according to Healthcare Dive.  One hospital told CMS this past November that patients should call or email the facility for price estimates, while admitting that it had removed all previously posted pricing files.  As to the other hospital in question, CMS was unable to find machine-readable files with standard charges for facility fees or a consumer-friendly list of standard charges for the required number of shoppable services.  It is our understanding that these two hospitals have the option to appeal the fines within 30 days or pay them in full within 60 days.

Other Shoes to Drop?

According to various studies, there appears to be weak compliance with the government’s price transparency rule thus far.  In fact, it is rare.  This past February, a patient advocacy group analysis of 1,000 hospitals found that only 14 percent of these facilities had complied with the CMS transparency rule.  Another study published last week in the Journal of the American Medical Association (JAMA) found just 6 percent of 5,200 hospitals reviewed had both an accessible file and a shoppable display, pursuant to the regulations.

So, while two Georgia facilities were the first to face CMS fines for failing to comply with the price transparency rule, they will surely not be the last.  The government appears to be using their actions against these facilities to send a message to the rest of America’s hospitals: straighten up and fly right or face the consequences.  With this in mind, we recommend you review the CMS regulations in this regard and do all you can to implement their provisions as expeditiously as possible.

If you have questions for us, you can reach us at info@miramedgs.com.