Earlier this year, the bipartisan “Prohibit Collection Hospital Not Disclosing Prices” law went into effect in Colorado, making it so that hospitals (and their collectors) cannot initiate or pursue debt collection from a patient or patient guarantor if the hospital’s website was not in compliance with the Centers for Medicare and Medicaid Services (CMS)’ price transparency requirements at the time services were delivered.
CMS Price Transparency Rule
CMS’ price transparency rule requires hospitals to post a comprehensive machine-readable list of their certain services and their prices, as well as a consumer-friendly tool to help patients shop for common services. The requirement has been in place since January 1, 2021, and not only has compliance with the rule been sporadic, but so too have been federal enforcement efforts.
Currently, noncompliant hospitals receive a warning and a request for a corrective action plan from the agency. If hospitals remain out of compliance, civil monetary penalties of up to $300 per day are levied against the hospital. However, less than a handful of hospitals have actually received those penalties.
Colorado Legislation Specifics
Under the legislation, patients may file a lawsuit if they believe the hospital was out of compliance. The hospital is not permitted to initiate a collection action against the patient or patient guarantor while the lawsuit is pending. If a judge or jury finds the hospital to be out of “material compliance with federal hospital price transparency laws,” and that the “noncompliance is related to the items or services,” the hospital is subject to a penalty equal to the amount of the debt, must refund any amount paid on the debt, dismiss any court action initiated by the hospital, and pay attorney fees and costs the patient or patient guarantor incurred relating to the action. The requirement that the transparency noncompliance be related to the items or services received means that a patient who underwent a knee surgery could not win their case because the hospital did not disclose the price of an unrelated pacemaker.
However, the law does not prevent hospitals from billing for their services, nor does it require hospitals to refund payments that have already been made. Further, critical access hospitals have until February 15, 2023, to come into compliance before their ability to collect on their bills will be restricted.
In the legislation, it was noted that the “lack of compliance with health-care price transparency laws by Colorado hospitals decreases the likelihood that Colorado consumers will be fully aware of affordable health-care options before purchasing items and services from hospitals, placing health-care consumers at greater risk of collection actions and other adverse actions relating to unpaid medical bills.
The legislation was sponsored by a handful of bipartisan legislators and made it through both legislative chambers almost entirely unopposed.
What’s Next?
Some industry experts are suggesting that more individual states will follow suit with similar legislation, in an attempt to increase the pressure on hospitals to adhere to the transparency regulations. Whether that will pan out remains to be seen, but it is certainly an area to keep an eye on, particularly if federal enforcement efforts do not increase in the coming months.