Legal, Hospitals, Policy

CMS proposes fining hospitals up to $2M annually for not following price transparency rule

CMS’ latest proposed rule, which includes stringent penalties for hospitals that are found to be flouting the price transparency rule, comes on the heels of an analysis showing that a vast majority of hospitals are not in compliance with the regulation that went into effect on Jan. 1.


Amid reports of widespread noncompliance with the federal hospital price transparency rule, the Centers for Medicare & Medicaid Services is proposing stringent penalties.

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Included in the 2022 Hospital Outpatient Prospective Payment System and ASC Payment System Proposed Rule, hospitals found to be flouting the price transparency final rule could be penalized with a fine ranging from $109,500 to $2 million per hospital per year.

The agency is proposing a minimum penalty of $300 per day that would apply to hospitals with a bed count of 30 or fewer; and a penalty of $10 per bed per day for hospitals with more than 30 beds. For the latter, CMS would institute a maximum daily dollar amount of $5,500.

Despite strong pushback from provider groups, the hospital price transparency final rule went into effect on Jan. 1. The rule requires hospitals to present pricing information — including prices negotiated with payers — in two ways. First, as a machine-readable file with all items and services, and second, as a display of shoppable services in a consumer-friendly format.

But several studies and surveys have shown that compliance with the rule is lacking. Most recently, The Washington Post published findings from a patient advocacy group that reveals 471 out of 500 hospitals studied were not compliant.

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The government is aiming to drive compliance with its newly proposed penalty.

“No medical entity should be able to throttle competition at the expense of patients,” said HHS Secretary Xavier Becerra, in a news release. “I have fought anti-competitive practices before, and strongly believe healthcare must be in reach for everyone. With today’s proposed rule, we are simply showing hospitals through stiffer penalties: concealing the costs of services and procedures will not be tolerated by this administration.”

In addition to the penalty, CMS is proposing that hospitals’ machine-readable files support automated searches and direct downloads.

Further, the agency is seeking public input on a variety of issues, including methods to identify and highlight exemplar hospitals and improving standardization of the machine-readable files.

The latter could prove necessary as there has been some uncertainty about how effective the rule is in allowing patients to make informed cost decisions when seeking care. An analysis published in April suggested that the price of a service from one provider might not be directly comparable to that of the same service from another, largely due to inconsistencies in how hospitals are presenting the data.

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