Earlier this year, the United States Centers for Medicare and Medicaid Services (CMS) announced an update to its enforcement processes for the Hospital Price Transparency regulations. The regulations, which went into effect on January 1, 2021, have found hospitals around the country slow to adapt and CMS slow to take action.
Under the transparency regulations, hospitals are required to make its standard charges public, including gross charges, discounted cash prices, and the charges negotiated between the hospital and third-party payers. The information must be made public via a single comprehensive machine-readable file with all standard charges and a consumer-friendly display of the standard charges for as many as 70 of the CMS-specified shoppable services provided by the hospital and as many additional hospital-selected shoppable services as is necessary to reach a total of at least 300 shoppable services.
Violations of the transparency regulations are typically uncovered in one of three ways: evaluating complaints made by the public; CMS’ review of individuals’ or entities’ analysis of noncompliance; and internal audits of hospital websites. Which hospitals receive a comprehensive review is determined by the degree to which the hospital seems to be out of compliance, with cases of “alleged egregious violations” prioritized above others. One example of an “egregious violation” is if a hospital has failed to publish any machine-readable file for price shopping.
Under the current process, CMS first provides a warning notice to the non-compliant hospital with instructions to correct the deficiencies within 90 days. If the hospital fails to come into compliance during that period, CMS will issue a corrective action plan (CAP) request with a 45-day deadline. The offending hospital is then required to submit a proposed completion date for CMS approval, averaging between 30 to 90 days. After that period, if the hospital has still not come into compliance, CMS will issue a civil monetary penalty (CMP). The average time to complete a case cycle is between 195 to 220 days.
Update to the Regulations
The update, however, will drastically shorten the timelines and impose automatic penalties on hospitals that fail to meet compliance deadlines. CMS will begin to require hospitals to submit a CAP within 45 days of the CAP request from CMS. CMS will also require hospitals to be in compliance with the transparency regulation within 90 days from the date of the CAP request, instead of allowing the hospital to propose the completion date.
Additionally, CMS will automatically impose a CMP on hospitals that fail to submit a CAP at the end of the 45-day CAP submission deadline. Currently, CMS does not impose an automatic CMP. However, before imposing the CMP, CMS will review the hospital’s files to determine whether any of the violations cited in the CAP request continue to exist. If they do, CMS will impose a CMP automatically. For hospitals that do submit a CAP by the deadline but fail to comply with the terms of the CAP by the end of the 90-day deadline, CMS will also review the hospital’s files to determine if any of the violations in the CAP request continue to exist. If so, an automatic CMP will be imposed.
Finally, for hospitals that have still not made any “good faith attempts” to meet the requirements, CMS will not issue a warning notice to the hospital. Instead, CMS will immediately request that the hospital submit a CAP and the process will start from there.
CMS notes that these changes will alter the timeline to no more than 180 days, or 90 days for cases where there is no warning notice (due to no attempts to comply with the requirements).
CMS Administrator Chiquita Brooks-LaSure told Congress during a hearing that these changes will help to “incentivize competition, improve consumer experience, and result in additional savings for our healthcare system and for patients.” During that same hearing, Brooks-LaSure referred to CMS’ authority on hospital price transparency guidance as “very limited” and noted that the agency would “love to work [with Congress] to increase our authority.”
These changes do not need to go through the notice and comment rulemaking process.