Hospitals, Are You in Compliance? Centers for Medicare & Medicaid Services Price Transparency Rule is in Effect
Stites & Harbison Client Alert, January 13, 2021
Although hospitals are still devoting their full attention and resources to responding to the ongoing COVID-19 pandemic, they are expected to comply with the Centers for Medicare & Medicaid Services (“CMS”) price transparency rule. After withstanding a recent legal challenge, the rule went into effect on January 1, 2021. Understandably, hospitals have been slow to comply with the rule.
The rule is part of the Trump administration’s larger effort to reduce healthcare costs for consumers. In his executive order instructing the Department of Health & Human Services (“HHS”) to propose the rule, President Trump expressed hope that enhanced transparency of the prices hospitals charge will allow consumers to make well-informed healthcare decisions.
In sum, the rule mandates that virtually every hospital in the U.S.—irrespective of their Medicare enrollment status—publicly disclose the “standard charges” for items and services they provide to patients. Standard charges include the rates hospitals privately negotiate with insurers, as well as the discounted rates hospitals offer to cash-paying patients. The transparency requirement is twofold: hospitals must publish both a comprehensive “machine-readable file containing a list of all standard charges for all items and services” and a “consumer-friendly list of standard charges for a limited set of [at least 300] shoppable services.” Hospitals must ensure that each list is up to date on an annual basis. According to hospitals’ complaints, implementing the rule’s requirements has proven more burdensome than the rule-makers anticipated.
As the Biden administration transitions into office, actual enforcement of the rule—at least while the pandemic continues to surge—is difficult to predict. After its unsuccessful attempt to delay the rule’s enforcement in court, the American Hospital Association (the “AHA”) called on both HHS and the incoming Biden administration to delay enforcement of the rule for the duration of the COVID-19 public health emergency. Citing numerous shortcomings of the rule, the AHA also urged the Biden administration to consider revising or rescinding the rule. As of January 12, 2021, the AHA has not received responses.
Because the Biden administration will likely prioritize the pandemic in its initial healthcare agenda, it seems unlikely that it will compel hospitals to adhere to such taxing administrative requirements, especially considering the fact that many hospitals are currently operating beyond their limits. The rule still remains in effect, however, and non-compliance places hospitals at risk of incurring civil penalties. Moreover, CMS has not signaled a reversal of its plan to audit a sample group of hospitals for compliance in January. As such, hospitals should do their best to comply with the rule’s requirements rather than gamble on the chance that CMS will decide to delay enforcement.
You can review the full text of the final rule here, as well as CMS’s answers to frequently asked questions here. You can also review the U.S. Court of Appeals’ ruling on the legal challenge to the rule here. For questions about compliance, please contact one our healthcare attorneys.