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Opening up the Blinds: Transparency Rules for Hospitals

September 13, 2023

A few months ago, the Centers for Medicare and Medicaid Services (CMS) published a fact sheet that outlines process updates the agency is making to increase compliance with the hospital price transparency requirements. As our readers may recall, the government’s hospital price transparency requirements are authorized by section 2718(e) of the Public Health Service Act, which essentially requires each hospital to make its standard charges known to the general public. 

Today’s article acts to summarize the CMS fact sheet and seeks to remind our readers that this is a topic that CMS is taking seriously. It will behoove hospital administrators, therefore, to carefully consider the enforcement actions CMS outlines below for non-compliant facilities.

Reciting the Regs

The Hospital Price Transparency regulation establishes enforceable guidelines by which hospitals must reveal the standard charges they have established. The price transparency regulation defines several types of standard charges, including:

  • Gross charges (as found in hospital chargemasters, which is the list of all individual items and services maintained by a hospital for which the hospital has established a charge, absent any discounts);
  • Discounted cash prices (the charge that applies to an individual who pays cash or cash equivalent for a hospital item or service); and
  • Charges negotiated between the hospital and third-party payers.

Hospitals are required to make these standard charges public in two ways: (a) a single comprehensive machine-readable file with all standard charges established by the hospital for all the items and services it provides; and (b) a consumer-friendly display of standard charges for as many of the 70 CMS-specified shoppable services that are provided by the hospital, and as many additional hospital-selected shoppable services as is necessary for a combined total of at least 300 shoppable services. This requirement can be satisfied through the release of a shoppable services file or by offering a price estimator that generates a personalized out-of-pocket estimate that takes into account the individual’s insurance information.

Comprehensive Review Process

The CMS fact sheet makes clear that the government is keeping an eye on hospitals relative to the above requirements. Like Saint Nick, it intends to keep a running list of who has been naughty and nice. The agency maintains three primary avenues for monitoring and assessing hospitals’ noncompliance:

  • Evaluating complaints made by the public;
  • CMS’s review of individuals’ or entities’ analysis of noncompliance; and
  • Internal audits of hospitals’ websites.

When initially evaluating complaints, if a hospital is associated with a sufficient number of allegations regarding “egregious violations” of the rule (such as failure to publish any machine-readable file), that case is prioritized for further scrutiny.

Enforcement Process Updates

The occasion of the CMS fact sheet on price transparency is a set of updated processes that CMS is now putting into effect. They include the following:

  1. Requiring CAP completion deadlines. CMS will continue to require hospitals that are out of compliance with the hospital price transparency regulation to submit a corrective action plan (CAP) within 45 days from when CMS issues the CAP request. CMS will also now require hospitals to be in full compliance with the hospital price transparency regulation within 90 days from when CMS issues the CAP request, rather than allowing hospitals to propose a completion date for CMS approval which can vary.
  2. Imposing CMPs earlier and automatically. CMS will now automatically impose a civil monetary penalty (CMP) on hospitals that fail to submit a CAP at the end of the 45-day CAP submission deadline. For hospitals that submit a CAP by the 45-day deadline but fail to comply with the terms of that CAP by the end of the 90-day deadline, CMS will re-review the hospital’s files to determine whether any of the violations cited in the CAP request continue to exist and, if so, impose an automatic CMP.
  3. Streamlining the compliance process. For hospitals that have not made any attempt to satisfy the requirements, CMS will no longer issue a warning notice to the hospital and will instead immediately request that the hospital submit a CAP.

These enforcement updates will shorten the average time by which hospitals must come into compliance with the hospital price transparency requirements after a deficiency is identified to no more than 180 days, or 90 days for cases with no warning notice, and will complement future efforts.

Enforcement Actions to Date

The government is serious about forcing its price transparency requirements onto acute care hospitals and is determined to punish those facilities that fail to follow these requirements. According to its own fact sheet, CMS is able to leverage automation “to complete hospital reviews quickly, accurately, and consistently.” The agency reports that it has increased the number of comprehensive reviews conducted from around 35 per month to over 200 per month.

As of April 2023, CMS had issued more than 730 warning notices and 269 requests for CAPs. CMS had imposed CMPs on four hospitals for noncompliance, which are posted and made publicly available on the CMS website. Interestingly, the fact sheet claims that “every other hospital that was reviewed through a comprehensive compliance review has corrected its deficiencies or is in the process of doing so.” For more information on CMS’ price transparency regulations and enforcement actions, please visit Hospital Price Transparency | CMS.

With best wishes,

Chris Martin
Senior Vice President—BPO

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