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How hospitals can get ahead of the coming CMS price transparency enforcement wave

September 22, 2021
From the November 2021 issue of HealthCare Business News magazine

CMS’s support appears to be taking the form of incentivizing broader compliance through higher penalties. The regulations currently authorize CMPs of up to $300 per day, regardless of the number of violations by a hospital, with a resulting annual ceiling of $109,500 per year. When CMS initially finalized these regulations, the agency characterized this rate as “commensurate with the level of severity of the potential violation, taking into consideration that nondisclosure of standard charges does not rise to the level of harm to the public as other violations (such as safety and quality issues) for which CMS imposes CMPs, and therefore, [it] should remain at a relatively lower level.”

But explaining that the agency is now “concerned by what appears to be a trend towards a high rate of hospital noncompliance,” CMS in a proposed rule released in August announced plans to significantly increase financial penalties for noncompliance, effective January 1, 2022. If CMS finalizes this proposal, hospitals with 30 beds or less will still face CMPs of $300 per day, but hospitals with 31 to 550 beds would be penalized up to $10 per bed per day, or a per-day penalty of up to $5,500. Hospitals with more than 550 beds would face the same ceiling, resulting in an annual penalty of $2,007,500. The penalty rates would still remain flat regardless of the number of violations.

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CMS also took the opportunity in this proposed rule to criticize observed practices that it views as violating the regulatory prohibition on erecting barriers to accessing price information. For example, CMS noted that some hospital websites have been coded in ways that “hinder the findability of a web page that contains a link to the machine-readable file,” and that others have implemented “anti-automation tools such as requiring users to pass tests proving they are human users prior to accessing the file” or are requiring users to agree to “all terms and conditions in a legal disclosure.” CMS hints that even if hospitals are posting the requisite data, failure to meet access standards could still result in CMPs.

Against the backdrop of a national mood increasingly in favor of price transparency in the healthcare industry, HHS Secretary Xavier Becerra’s enforcement background looms large. Prior to joining HHS, Secretary Becerra served as the California Attorney General, and in that position he took a very active role in healthcare enforcement. He can be expected to take the same approach in his new position, and under his leadership, HHS will be more likely to take on direct enforcement actions, rather than leaving other entities, such as the Department of Justice, to pursue indirect enforcement, such as through the federal False Claims Act.

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