CMS Proposes Increasing Penalties For Hospitals Not Meeting Price Transparency Rule

The Biden administration wants to include a per-bed monetary penalty for larger hospitals that do not comply with a price transparency rule after several analyses have shown widespread noncompliance among facilities.

The administration included the provision in the proposed 2022 Outpatient Prospective Payment System (OPPS) proposed rule released Monday by the Centers for Medicare & Medicaid Services. The regulation details payment rates for hospitals and ambulatory surgery centers (ASCs). It includes a pay hike for hospitals and ASCs but a dramatic reversal on the number of procedures that ambulatory surgery centers can perform.

The proposed rule calls for an update to OPPS payment rates for hospitals that meet quality reporting requirements by 2.3%. The agency also plans to update payment rates for ASCs by 2.3% as well.

But a major proposal in the rule is to increase penalties for hospitals not ensuring price transparency.

“With today’s proposed rule, we are simply showing hospitals through stiffer penalties: concealing the costs of services and procedures will not be tolerated by this administration,” CMS Administrator Chiquita Brooks-LaSure said in a statement.

A controversial rule required hospitals to post online payer-negotiated rates and meet other price transparency thresholds starting on Jan. 1, 2021.

However, several studies and analyses have shown that many hospitals are not complying with the requirements. Experts have said that a major reason is that there is a minimal fee for noncompliance, which is $300 for each day the hospital does not meet the requirements.

The proposed rule keeps the $300 per day penalty, but only for hospitals that have fewer than 30 beds. Any hospital with more beds faces a $10 per bed, per day penalty up to $5,500 a day.

“Under this proposed approach, for a full calendar year of noncompliance, the minimum total penalty amount would be $109,500 per hospital, and the maximum total penalty amount would be $2,007,500 per hospital,” the agency said in a fact sheet.

CMS does want comments on other potential avenues for scaling the monetary penalties, including factoring in the hospital’s reasons for noncompliance and the severity of the situation.

The agency is also seeking comments on best practices for online price estimator tools that hospitals can use in lieu of posting standard charges for 300 shoppable services. CMS’ rule also clarified that any price estimator must take into account an individual’s insurance information when determining a price.

Scaling back ASC expansion

The 2021 final payment rule revised the criteria used to evaluate what procedures can be performed in an ASC. This move ensured that an additional 267 surgical procedures were added to the ASC-covered procedures list this year.

But that dramatic expansion may be curbed in 2022. CMS is also proposing to remove 258 out of the 267 procedures added last year.

The agency does want more comments on any of the procedures that should stay on the list.

If the expansion is curtailed in the final rule, it could impact some major acquisition trends in the hospital industry. The major hospital chain Tenet Healthcare sold off most of its urgent care business last year and acquired 45 ASCs.

CMS also aims to keep around the Inpatient Only List, which is the services that Medicare will only pay for in a hospital setting due to their complexity. The Trump administration got rid of the list in the 2021 OPPS rule, starting with nearly 300 musculoskeletal services in 2021 and more services over the next couple of years.

But CMS said on Monday that it received a large number of comments from stakeholders worried about the impact on patient safety if the inpatient-only list goes away.

If finalized, the proposed rule would return those 298 services to the list in 2022 and ensure that any service removed from the list be reviewed against longstanding criteria to preserve safety, a fact sheet on the rule said.

Other key provisions in the proposed rule, which is open for comment for 60 days, include:

  • * Not using data from 2020 when determining the best data for setting rates. The COVID-19 pandemic caused a massive shift in the use of healthcare services and procedures. Instead, the agency will use 2019 healthcare data that will be a better approximation of “expected costs” for 2022.
  • * Keeping a more than 20% cut to drug reimbursements for most covered entities under the 340B program. The Trump-era cuts were upheld by a federal appellate court last year. The Supreme Court will hear a hospital industry challenge to the cuts during its next term.
  • * A request for information on how a new provider type called Rural Emergency Hospitals will work. A spending package passed earlier this year creates the new provider type in January 2023. Rural hospitals and critical access hospitals can apply to convert to be an emergency hospital. The goal is to boost the number of facilities that provide emergency services to rural areas after several years of rapid hospital closures. The RFI wants information on health and safety standards as well as payment and quality policies.


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