Client Alerts
May 26, 2021

CMS Has Begun to Enforce the Price Transparency Rule Against Hospitals

Stites & Harbison Client Alert, May 26, 2021

The Centers for Medicare & Medicaid Services (CMS) has recently begun to send warning letters to hospitals that are not in compliance with the recently effective price transparency rule. This warning comes on the heels of CMS’s audits of a sample of hospitals in January. In order to enforce the rule, CMS is authorized to engage in any of the following three actions, usually, although not necessarily, in the listed order:

  1. Provide written warnings to noncompliant hospitals;
  2. Request a corrective action plan upon continued noncompliance if such noncompliance constitutes a material violation of one of the rule’s requirements; and/or
  3. Impose a civil monetary penalty and publicize the penalty on a CMS website if the noncompliant hospital fails to respond to CMS’s request to submit a corrective action plan or to comply with the plan’s requirements.

The civil monetary penalties could be severe for some hospitals—the maximum dollar amount is $300 per day. The penalty may not exceed the daily maximum, even if a hospital is in violation of multiple requirements of the rule.

To summarize, the hospital price transparency rule requires virtually every hospital in the U.S. to publish a list of all their standard charges in a machine-readable format online and a consumer-friendly list of standard charges for at least 300 “shoppable services.” Standard charges include the rates hospitals privately negotiate with third-party payers. Understandably, hospitals have been hesitating to comply with the rule.

The Biden administration has not demonstrated any signs of halting enforcement of the price transparency rule. The Biden-Sanders Unity Task Force, which was created during the Democratic Party presidential primaries, seemingly revealed Biden’s position, “We will work to increase price transparency in the healthcare system across all payers.” Since President Biden took office and inherited President Trump’s healthcare policies, however, he has remained silent on the rule. The Senate recently confirmed Chiquita Brooks-LaSure to serve as CMS administrator. In her confirmation hearing, Brooks-LaSure did not have the opportunity to address her position on the price transparency rule. Brooks-LaSure’s former board membership with Fair Health is telling, however, as Fair Health advocates for increasing price transparency in the healthcare setting. While Brooks-LaSure may generally support transparency, the future of the price transparency rule, specifically and as currently written, under her leadership still remains uncertain.

Hospitals should heed CMS’s recent enforcement efforts and ensure compliance to avoid detection on CMS’s radar. Assuming CMS follows the usual order of its enforcement options, hospitals will have the opportunity to come into compliance with the rule without incurring any civil monetary penalties. We will continue to monitor CMS’s enforcement of the rule.

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