By Carrie Douglas and Zachary Trotter
A patient rights organization recently reported that only 16 percent of the 2,000 U.S. hospitals it reviewed were in compliance with the federal Hospital Price Transparency Rule. Back in June, the Journal of the American Medical Association published a study that also showed that progress on price transparency was slow. To date, CMS has imposed two fines totaling more than $1 million for failure to comply with the Rule and issued more than 350 warning notices to hospitals with more surely to come.
The federal Hospital Price Transparency Final Rule took effect on January 1, 2021 with the goal of increasing healthcare price transparency and facilitating patient price shopping online. Hospitals are required to post machine-readable, consumer-friendly files of the rates they negotiate with payers, gross charges and discounted cash prices for 300 “shoppable services.” CMS has announced 70 mandatory “shoppable” services which must be reported by hospitals. These services include:
Preventive Medicine Services
Hospitals possess more discretion, however, in selecting what services are identified in the remaining 230 disclosures. Notably, the 230 services must be services that are commonly provided to the hospital’s patient population and selected from the following categories of “shoppable” services:
Evaluation and management
Laboratory and pathology
Under the Rule, for hospitals with 30 or fewer beds, the minimum civil monetary penalty for failure to comply is $300 per day. For hospitals with more than 30 beds, the minimum civil monetary penalty for failure to comply is $10 per bed per day, capped at $5,500 per day. Thus, yearly noncompliance penalties can range from $109,500 to more than $2,000,000.
For purposes of complying with the Price Transparency Rule, hospitals must include five types of standard charges for the 300 “shoppable services.”
A hospital may meet the requirements of displaying its shoppable services by means of a price estimator tool if it provides estimates for shoppable services provided by the hospital, allows healthcare consumers to obtain an estimate of what they will pay for the shoppable services, and allows consumers to search for shoppable services by service description, billing code, and payor.
If a hospital does not use a price estimator tool, it may meet the Rule’s requirement by disclosing its Standard Charge information, which requires a hospital to make public the Standard Charges for as many of the 70 CMS-specified shoppable services that are provided by the hospital, a description of each shoppable service, the billing code for those services, and more.
Regulators have pledged to increase the penalties and have sent hospitals warning letters and corrective action mandates, but fines have only just begun. To promote further compliance, commentators expect CMS to aggressively issue fines and to increase the amount of the fines to a point where they are too large to ignore.
Currently, hospitals’ non-compliance may reflect hospital executives’ concerns about the administrative work required to set up the price transparency database, their rivals undercutting them on publicly disclosed prices and the legal ramifications if a patient bill doesn’t match the disclosed data. Given the fine limitations, there are also relatively small consequences for hospitals that ignore or only partially comply with the Rule. These consequences include allowing CMS to publish a list of hospitals that are penalized by CMS for failure to comply.
Right now, hospital executives, in conjunction with their legal counsel, should proactively plan how to achieve their goals, the legal ramifications of any failure to comply with the Rule, and, if needed, how to challenge any asserted penalties.
Zachary Trotter is a partner at Waller in Birmingham, Ala. where he assists hospitals, health systems, physicians and other providers with a broad range of transactional, compliance and operational issues.
Carrie Douglas is a partner at Waller where
her legal practice focuses on assisting healthcare providers resolve reimbursement disputes with commercial payors.