CMS Issues First Penalties for Two Hospitals Violating Price Transparency Rules

CMS Inspecting Hospital Websites for Compliance

On June 7, 2022, the Centers for Medicare and Medicaid Services (CMS) imposed civil monetary penalties (CMPs) against two hospitals for noncompliance with the agency’s price transparency requirements. The hospitals violated the requirements by failing to update their websites and/or respond to CMS’ letters about the violation. Subsequently, CMS fined one hospital $214,320 and the other $883,180. Click here to read the CMS notices sent to the two hospitals that’s published on their website.

This is the first time CMS has penalized hospitals for failing to meet the transparency requirements since they went into effect. 

CMS Price Transparency Requirements

CMS first implemented the price transparency requirements under the Calendar Year (CY) 2020 Outpatient Prospective Payment System (CY 2020 OPPS) Final Rule. Effective January 1, 2021, CMS required hospitals to post on their websites the following information:

  • A single machine-readable file containing standard charges for all items and services furnished by the hospital
  • A consumer-friendly display of shoppable services that a healthcare consumer can schedule in advance, including standard charge information for the services

CMS Actions and Penalties for Noncompliance

If CMS concludes that a hospital has not complied with the price transparency requirements, CMS may take a number of actions, which will occur in the following order:

  1. Provide a written warning to the hospital for the specific violation(s)
  2. Request a corrective action plan (CAP) from the hospital if its noncompliance constitutes a material violation of one or more requirements
  3. Impose a CMP on the hospital and publicize the penalty on the CMS website if the hospital fails to respond to CMS’ request to submit a CAP or comply with the requirements of a CAP

In response to concerns from lawmakers and academics over noncompliance with the rules and limited enforcement action, CMS finalized increased penalties for noncompliance under the 2022 OPPS Final Rule. Effective January 1, 2022, the daily and annual penalties for noncompliance by hospital size are as follows:

See Table 76: Application of CMP Daily Amounts for Hospital Noncompliance for CMPs Assessed in CY 2022 and Subsequent Years, 86 Fed. Reg. 63458, 63945 (Nov. 16, 2021).

In a February 2022 report from a patient advocacy organization, only 14.3% of the 1,000 hospitals surveyed had complied with the requirement.

Act Now to Help Ensure Your Hospital is Compliant
with the Price Transparency Requirements

The recent enforcement actions show that CMS is inspecting hospital websites to ensure compliance with the price transparency rules. To comply with the requirements, hospitals should:

  • Conduct an internal or external website audit to confirm if there is a published single machine-readable file of standard charges and a consumer-friendly list of shoppable services, consistent with CMS regulations
  • Confirm updated policies and procedures are in place that address the reporting of standard charge information to ensure compliance with the price transparency regulations, including the most recent CMS 2022 updates
CMS Available Resources

CMS Review Timeline, Correspondence and Fines for the Two Hospitals in Violation

In the June 2022 letters, CMS indicated that the two hospitals were in violation of the price transparency rules since March and April 2021. Prior to issuing these letters, CMS issued a written warning to the hospitals providing them an opportunity to respond and share supporting documentation to address the violations. The hospitals did not provide supporting documentation. In September 2021, CMS reviewed the two hospitals’ websites for a second time, finding that the hospitals continued to be out of compliance. The agency then issued a request for a CAP and outlined the specific violations of the regulatory requirements, which included:

  • Failure to comply with 45 code of federal regulations (CFR) § 180.50(a)(2) requiring each hospital location operating under a single hospital license (or approval) that has a different set of standard charges than the other location(s) operating under the same hospital license (or approval) must separately make public the standard charges applicable to that location.
  • Failure to make public a machine-readable file containing a list of all standard charges for all items and services as required at 45 CFR § 180.40(a).
  • Failure to publish the information described in 45 CFR § 180.50(b) in a single digital file that is in a machine-readable format as required at 45 CFR § 180.50(c).
  • Failure to follow the naming convention specified by CMS as required at 45 CFR § 180.50(d)(5).
  • Failure to make available a consumer-friendly list of standard charges for a limited set of shoppable services as provided in § 180.60, as required at § 180.40(b).
  • Failure to display the information described in § 180.60(b) in a prominent manner that identifies the hospital location with which the information is associated, as provided at 45 CFR § 180.60(d)(2).

CMS advised the hospitals that the CAP was due in 45 calendar days. In one case, the hospital did not submit a CAP. CMS held a technical assistance call with the hospital and reiterated the steps the hospital must take to come into compliance. The agency then issued a recap of the call and requested the hospital submit a CAP within 10 calendar days. The hospital again did not submit a CAP and continued to be out of compliance.

A representative for the other hospital submitted correspondence to CMS describing the systems the hospital had in place to provide patients with estimated cost information but did not specify any corrective actions that the hospital intended to take. CMS requested a revised CAP, which the hospital did not submit. CMS held a call with this hospital and, in follow-up, requested a revised CAP. The hospital did not submit a revised CAP and continued to be out of compliance.

As a result of the hospitals’ failures to take corrective actions and come into compliance, CMS imposed a total CMP of $214,320 to one hospital and $883,180 to the other hospital. The agency notified the hospitals that they must pay the CMP in full within 60 calendar days. CMS advised that, when hospitals remain noncompliant, the agency may issue subsequent notices imposing additional CMPs for continuing violation(s). Continued noncompliance will result in CMPs continuing to accrue.

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These materials are for general informational purposes only. These materials do not, and are not intended to, constitute legal or compliance advice, and you should not act or refrain from acting based on any information provided in these materials.Neither Ensemble Health Partners, nor any of its employees, are your lawyers.Please consult with your own legal counsel or compliance professional regarding specific legal or compliance questions you have.