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Medicare Holds Off on Hospital Price Disclosure Fines for Now (1)

Aug. 16, 2021, 9:35 AMUpdated: Aug. 16, 2021, 4:10 PM

The Medicare agency is giving hospitals time to adjust to its price transparency rule, so far refraining from penalizing providers despite recently proposing to increase sanctions for those that don’t comply.

Hospitals have been apprehensive since the Trump administration announced they would be required to disclose standard charges for items and services in a final rule (RIN 0938–AU22) published in November 2019.

The vast majority of hospitals—94.4%—haven’t met one or more of the requirements since the rule took effect Jan. 1, 2021, according to a recent sample of 500 hospital websites conducted by Patient Rights Advocate. Right now many hospitals are getting warning letters if they don’t comply.

Rather than rescinding or modifying the Trump-era rule, the Biden administration has also proposed tougher sanctions. The Centers for Medicare & Medicaid Services suggested increasing the penalty for noncompliant hospitals in a July proposed rule (RIN 0938-AU43) regulating outpatient payment rates for acute care hospitals.

Hospitals can currently be fined up to $300 a day. If the proposal is finalized, the penalty would increase to at least $300 a day for smaller hospitals and $10 a bed a day for larger hospitals, but no more than $5,500 a day.

“Price transparency leads to lower and more uniform prices,” CMS Medical Officer Terri Postma said at a recent webinar. “Falling prices may, in turn, expand consumers’ access to health care.” The agency’s crackdown on anticompetitive practices feeds into the Biden administration’s larger goal of closing the equity gap in care.

The price disclosure requirements has put hospitals in a tough position, which many groups have been vocal about. Hospitals that publish their prices as-is could dissuade consumers from seeking care if they can’t afford the typical fee for treatment. Those that lower their prices as a result of being asked to publish them could hurt their revenue streams. Not complying with the rule opens hospitals up to monetary penalties that could get steeper.

The result is burdening “a workforce already under immense pressure,” as the Covid-19 pandemic rages on, America’s Essential Hospitals President and CEO Bruce Siegel said in a statement after the increased penalty was proposed.

Noncompliance

When hospitals are found noncompliant through an audit of their website, the CMS may provide them a written warning of their violations or request an action plan for correction, Postma said.

The CMS began sending warning letters to hospitals in April and had sent roughly 165 of them as of mid-July, according to a CMS spokesperson.

The “CMS intends to continue its monitoring and enforcement activities and will issue additional warning letters on a monthly basis going forward, as necessary,” the spokesperson said in an email.

Hospitals have 90 days to address their violations before the CMS determines “whether additional compliance actions need to be taken,” Postma said.

“We are simply showing hospitals through stiffer penalties: concealing the costs of services and procedures will not be tolerated by this Administration,” HHS Secretary Xavier Becerra said in a statement the day the proposed rule was released.

The CMS spokesperson confirmed that the agency has not yet issued any fines to hospitals.

Although reports have found early noncompliance with the rule, the American Hospital Association expects “the actual rate of compliance among hospitals will be found to be much higher than what is claimed by outside groups,” said Sean Barry, the group’s senior associate director of media relations .

Dissatisfaction

The Trump-era price disclosure requirements sparked legal action from major hospital groups when they were published, led by the AHA. The groups claimed the CMS overstepped its authority, but the final rule survived a lawsuit and an appeal in 2020, forcing hospitals to be more upfront about what they charge patients.

The groups are even more upset by the Biden administration’s latest move.

“We are deeply concerned about the proposed increase in penalties for non-compliance,” Stacey Hughes, executive vice president of AHA, said in a statement when the proposed rule was released.

The policy is moving in the “wrong direction,” Siegel said.

(Updates with comment by AHA spokesman on rate of compliance in 15th paragraph. A previous version of this story deleted a reference to a suit by the U.S. Chamber of Commerce over a different transparency rule. )

To contact the reporter on this story: Allie Reed in Washington at areed@bloombergindustry.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Karl Hardy at khardy@bloomberglaw.com

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