Feds Lay Down the Law on Transparent Pricing

The Centers for Medicare & Medicaid Services are levying civil monetary fines for non-compliant hospitals.

The feds are going after hospitals they believe are not in compliance with the Hospital Price Transparency rule, according to Govind Goyal who spoke on the topic today during Monitor Mondays.

Goyal, a subject matter expert, told Monitor Monday audience members that prior to January 1 of this year, if your hospital had been identified by the Centers for Medicare & Medicaid Services (CMS) as being non-compliant, the civil monetary penalties were insignificant or minimal. 

“It was a “static” penalty regardless of the size of your hospital,” Goyal said during the broadcast. “In other words, a 500-bed hospital would be fined the same as a 25-bed critical access hospital and that would equate to $300 a day, or only $110,000 translated over a year.”    

According to Goyal, CMS realized that the fines were not high enough and based on their own sampling and reviews, concluded there was a high rate of non-compliance among hospitals in 2021. 

“So, to hold hospitals accountable CMS dramatically increased the fines starting this year and based the fines on a sliding scale,” Goyal said.  “Currently, the fines are $10 a day multiplied by the number of beds. So, for that 500-bed hospital that was only subject to a fine of $110,000 in 2021, that hospital is now faced with a fine that’s close to $2 million in 2022.”  

Goyal explained that what is important to note is the number of days is equal to the number of days the hospital was determined to be out of compliance, beginning with the effective date of the final rule. Another important note is that CMS does feel that before financial penalties are applied (along with public shaming on their website) that a warning letter is issued, depending on the severity of non-compliance. CMS is likely to seek a response from the non-compliant entity, asking for what the agency calls a Corrective Action Plan or CAP. 

 “CMS is continuing to audit hospital websites and has already issued over 350 warning letters with some of those hospitals still not compliant,” Goyal warned. “As many of you are aware, CMS did issue its first round of civil monetary penalties in June.”

According to Goyal, two hospitals in Georgia were fined for failure to comply with the price transparency rule. The fines totaled more than $1 million.

“One of the main issues identified within these hospitals were “machine-readable files,” Goyal said, noting “that many line items such as supplies were missing in the file. This is typical if claims data is used to generate the machine-readable file versus payer contract rates and term sheets as required by CMS.”

Goyal said hospitals need to include all items and services regardless of volume, including pharmacy items at the National Drug Code level. He said hospitals should include all payers at the plan level, including Managed Medicaid and Medicare. 

“Additionally, you (hospitals) should include negotiated rates from any employed physicians and put everything in a single file,” Goyal said, continuing, don’t break DRGs into separate file.” 

According to Goyal, a new law in Colorado that just went into effect last month allows for a patient to sue a hospital if that hospital is non-compliant with price transparency and if that hospital attempts to send a patient to collections.

Although it is uncertain at this time, if the law might be adopted by other states, the recent requirements of good faith estimates as found in the No Surprises Act and also in the price transparency rule, indicate that price transparency will be a permanent fixture in healthcare compliance.