Hospital Not Making Its Prices Transparent? CMS Wants to Raise the Penalty for That

WASHINGTON — Large hospitals could be fined up to $2 million annually if they fail to comply with federal rules on making hospital prices more transparent, according to a proposed rule released Monday by the Centers for Medicare & Medicaid Services (CMS).

“Hospital price transparency helps Americans know what a hospital charges for the items and services they provide,” the agency said in a press release. “CMS takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021.”

Therefore, “CMS proposes to increase the penalty for some hospitals that do not comply with Hospital Price Transparency final rule,” the press release said. “Specifically, CMS is proposing to set a minimum civil monetary penalty of $300/day that would apply to smaller hospitals with a bed count of 30 or fewer and apply a penalty of $10/bed/day for hospitals with a bed count greater than 30, not to exceed a maximum daily dollar amount of $5,500. 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 rule contains a number of other provisions, including:

Increasing payments to hospital outpatient facilities and ambulatory surgery centers (ASCs). CMS is proposing to increase payments to both types of facilities by 2.3% in 2022, as long as quality reporting requirements are met, the agency explained in a fact sheet. “This change is based on the projected hospital market basket increase of 2.5% with a 0.2 percentage point productivity adjustment,” CMS said.

Stopping the phase-out of the “inpatient-only” (IPO) list. For a long time, Medicare maintained a list of procedures that it would cover only if they were done on an inpatient basis. But earlier this year, “CMS finalized a policy to eliminate the IPO list over a 3-year period, removing 298 services from the IPO list in the first phase of the elimination,” according to the fact sheet. “However, we received a large number of stakeholder comments throughout the CY [calendar year] 2021 rulemaking cycle and following issuance of the final rule with comment period that opposed the elimination of the IPO list primarily due to patient safety concerns, stating that the IPO list serves as an important programmatic safeguard.”

“For CY 2022, CMS is proposing to halt the elimination of the IPO list and … we propose to add the 298 services removed from the IPO list in CY 2021 back to the IPO list beginning in CY 2022,” the fact sheet continued. “This change in policy would ensure that any service removed from the IPO list has been reviewed against Medicare’s longstanding IPO list criteria to determine if it is appropriate for Medicare to pay for the provision of the service in the outpatient setting.” CMS also plans to make more clear what criteria it will use to evaluate procedures for removal in the future.

Changing the radiation oncology episodic payment model. This model was supposed to launch in January, but was delayed by CMS until July 1, and then by Congress until next January. CMS is proposing several changes to this model — which is slated to run for 5 years — including removing brachytherapy from the list of included modalities, revising the cancer inclusion criteria, and removing liver cancer from the model “as it does not satisfy the model’s cancer inclusion criteria.” CMS also plans to adopt an “extreme and uncontrollable circumstances” policy. “This policy would provide flexibility to reduce administrative burden of model participation, including reporting requirements, and/or adjust the payment methodology as necessary when extreme and uncontrollable circumstances exist,” according to the fact sheet.

CMS also is proposing to continue paying the average sales price (ASP) minus 22.5% for drugs bought through the 340B program, which applies to hospitals with a significant proportion of low-income and uninsured or underinsured patients. This proposal is not sitting well with America’s Essential Hospitals (AEH), which represents more than 300 hospitals that provide care to low-income, uninsured, or otherwise vulnerable patient populations.

“The ill-conceived cut to hospitals in the 340B Drug Pricing Program ignores congressional intent for the program, undermines savings for hospitals that operate with little or no margin, and jeopardizes access to care in underserved communities,” AEH President and CEO Bruce Siegel, MD, MPH, said in a statement. “This policy, coupled with continued cuts to outpatient clinics, would drain essential hospitals of vital resources as they continue to combat a worsening COVID-19 pandemic. Rather than maintain these cuts, CMS should immediately rescind these deeply damaging policies and work with essential hospitals to ensure they can meet their safety-net mission.”

The American Hospital Association (AHA), which includes a broader coalition of hospitals, had a different concern: the proposed penalty increases for not complying with transparency laws. “Hospitals and health systems are committed to helping patients access the information they need to make decisions about their care, including financial information,” AHA Executive Vice President Stacey Hughes said in a statement. “We will closely review the agency’s regulations related to price transparency and advocate that any final policies meet this objective. However, we are deeply concerned about the proposed increase in penalties for non-compliance, particularly in light of substantial uncertainty in the interpretation of the rules.”

On the other hand, the AHA applauded the proposal to keep the “inpatient-only” list, noting that getting rid of that list “could have negatively impact[ed] Medicare patients’ safety and quality of care.”