CMS Adds Teeth to its Price Transparency Rule

CMS Adds Teeth to its Price Transparency Rule

The Centers for Medicare & Medicaid Services (CMS) has announced a new approach to penalties applied under the Hospital Price Transparency rule. Before I describe that, it may be helpful to try to bring some clarity to the potentially confusing pricing provisions launched in the last few years. 

There have been two distinct pricing provisions. This article focuses on price transparency regulations, which are found at 45 C.F.R., Part 180. These regulations are different from the No Surprises Act (NSA), which was passed with the main goal of assuring that patients going to an in-network facility or obtaining emergency care out-of-network are not balance-billed. But the NSA also requires the provision of good-faith estimates for a broader range of patients. Right now, good-faith estimates only go to patients who aren’t using insurance to pay for their care, either because they are uninsured or because they are choosing not to use their insurance for a particular service. The good-faith estimate applies broadly to licensed healthcare entities and professionals. 

The price transparency regulations, which were issued in November 2019, are different. First, they only apply to hospitals. Second, rather than applying to specific patient encounters, they set up a broad requirement for hospitals to post information about their pricing. For example, CMS has specified 70 specific shoppable services for which prices must be posted online, and each hospital is given the opportunity to choose an additional 230 services, so that 300 shoppable services are posted. A shoppable service is planned medical care, something you can schedule, like a knee replacement or delivery of a child. (Ok, maybe you don’t always schedule the delivery of a child, but you have enough warning to price shop.)

In addition, there’s a requirement to make tremendous volumes of pricing data about nearly all of your services available in a machine-readable format. Among the information that must be provided are the gross charges for a service, as well as specific negotiated contract rates for each payor, and you must specifically identify the highest and lowest negotiated charges. Finally, you have to provide information about your discounted cash price. In short, you need to provide a lot of data, and in different formats – some easily accessible to the public, others readable by computer.

When the price transparency regulations were first issued, the penalty for noncompliance was $300 a day, leaving many organizations to figure they would simply pay the fines rather than post the information. As a result, CMS increased the penalty, so it can reach $5,500 a day for hospitals with 550 beds. In short, the government wanted some teeth behind this requirement.

Now that there are teeth, the government is going to bite away. Last week, federal officials indicated that they were going to continue heightened emphasis on the Price Transparency rule.

CMS has now announced that they have issued 730 warning notices and 269 requests for corrective action plans. They are conducting approximately 200 comprehensive reviews of hospitals each month. Going forward, hospitals are expected to submit a corrective action plan within 45 days of a request, and come into full compliance within 90 days of the date they were asked to provide a corrective action plan. In other words, if you take 45 days to write the plan, you have 45 more to implement it. 

Historically, the government was issuing warning letters before demanding a corrective action plan. Now, however, if CMS feels that an organization didn’t make a real effort to comply with the rule, they will not issue any warning. You will get an immediate demand for a corrective action plan, and compliance within 90 days of that demand will be forthcoming – or else.

The bottom line is that if you been procrastinating on the Price Transparency rule while humming Wilson Phillips’s “just hold on for one more day,” don’t. Because if you keep stalling, it is highly unlikely that “things will go your way.”


David M. Glaser, Esq.

David M. Glaser is a shareholder in Fredrikson & Byron's Health Law Group. David assists clinics, hospitals, and other health care entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David's goal is to explain the government's enforcement position, and to analyze whether this position is supported by the law or represents government overreaching. David is a member of the RACmonitor editorial board and is a popular guest on Monitor Mondays.

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