Published: May 12, 2023
Healthcare Policy

Updates to CMS Hospital Price Transparency Enforcement in 2023

Rex H.
Rex H.
8 minute read
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Administrators from the Centers for Medicare and Medicaid Services (CMS) feel the hospital price transparency program has already proved successful. They credit the rule with helping drive down hospital charges and giving patients more knowledge when reviewing their healthcare options.

However, a 2022 CMS review determined that major deficiencies exist after nearly two years of running the program. The review found 30% of hospitals still fail to meet the program’s rules. In response, CMS recently announced several changes to its enforcement procedures designed to improve compliance with the program.

What is Hospital Price Transparency?

The No Surprises Act established the hospital price transparency program effective January 1, 2021. The law modifies section 2718(e) of the Public Health Service Act. It gives CMS the power to fine any hospital that doesn’t follow the program’s rules. 

CMS believes that helping hospitals publicize their charges in a standardized method will help patients make informed healthcare choices. CMS also stresses simplicity as they want hospitals to publish their data in a manner that patients can easily understand. Accurate charge displays and out-of-pocket estimates help patients shop for services. In theory, the resulting competition can drive down costs.

Most hospitals in the U.S. — including Washington D.C. and territories — must comply with the program’s rules. Check with CMS if you’re unsure whether your hospital meets CMS’ participation criteria.

Recent Updates to the Enforcement Process

CMS is committed to providing extensive technical assistance to help hospitals fulfill the price transparency program’s rules. Its enforcement process includes a thorough process to help hospitals achieve compliance and avoid the penalty.

Prior to the enforcement update, if CMS identified your hospital as noncompliant it first sent a warning letter. Your hospital would have 90 days to try to fix any deficiencies and avoid further action. If it failed to do so, CMS would then send a request to develop a corrective action plan (CAP). Your hospital would have 45 days to submit the CAP along with a proposed date to complete the plan. Completion dates generally ranged from 30 – 90 days according to CMS.

The total review cycle generally took 195 – 225 days. Failure to fix compliance deficiencies within this window could lead to CMS issuing a civil monetary penalty (CMP). CMS lists all hospitals that receive a penalty on their website.

CMS regularly assesses its enforcement protocols to find new ways to simplify the process for noncompliant hospitals. The most recent hospital price transparency enforcement update — announced on April 26, 2023 — is designed to cut the review cycle to no more than 180 days. The changes include:

Enforced CAP Completion Deadlines

Once CMS tells your hospital it needs to submit a corrective action plan (CAP), you now have 90 days to create and complete a plan. Your hospital can no longer request its own CAP completion date. The 90-day deadline starts with the date of issuance on the CAP request notice. CMS defines this date as no more than five days after a USPS postmark or commercial carrier deposit date. 

Your hospital still must submit the CAP to CMS within 45-days of CAP notice’s date of issuance. This rule has not changed. Standardizing the completion deadline in the same manner as the submission deadline should provide your hospital more clarity when designing a CAP. 

If your hospital will have to file a special request to CMS if it requires more than 90-days to complete a CAP. CMS will only consider such a request if circumstances beyond your hospital’s control cause the delay.

Automatically Imposing CMPs Sooner

CMS largely avoided charging hospitals with a civil monetary penalty (CMP) during the first two years of the price transparency program. It did so only after extensive efforts to help hospitals become compliant and multiple manual reviews. This may change going forward as CMS has automated part of the process.

CMS will now automatically charge your hospital a CMP if it fails submit a CAP within the mandated 45-day deadline. CMS will also automatically issue a CMP if your hospital fails to complete the CAP within the 90-days.

CMS doesn’t provide details on the extent of its automation in levying CMPs, but some manual processes still exist. The enforcement update states that CMS will manually re-review your hospital’s case files before approving an automated CMP.

Accelerated Compliance Process

CMS will no longer send a warning letter to your hospital if it has made no attempt to follow the price transparency program’s rules. Previously, CMS sent all non-compliant hospitals — regardless of the scope of the non-compliance — a warning letter that provided a 90-day window to meet compliance. This gave hospitals a chance to rectify the issue without having to adhere to the formal process of a CAP.

Under the new enforcement procedures, your hospital will immediately receive a CAP request in this scenario. It will only have 90 days to achieve compliance as opposed to the original 190 – 225-day cycle. 

Your hospital will still receive a warning letter if it attempted to fulfill the price transparency rules but failed to satisfy all the requirements. In this situation, your hospital will have a total of 180 days to achieve compliance.

Understanding the Price Transparency Requirements

CMS left most of the price transparency program's requirements unchanged. Your hospital still must publicize its standard charges. CMS defines standard charges as including all the following:

  • Gross Charges: your hospital’s prices for all items and services it maintains a set charge for on its chargemaster. These generally include supplies, procedures, room and board, facility fees, and professional charges. 
  • Discounted Cash Prices: your hospital’s prices for all items and services charged to self-pay patients. These patients pay in cash or with a cash-equivalent.
  • Third-Party Charges: your hospital’s contracted rates negotiated with insurance companies or other third-party payers. The information must show the different rates for each item or service among all contracted payers. The information must also highlight both the lowest (de-identified minimum) and highest (de-identified maximum) negotiated charge amount for each item or service.

Your hospital must use two different methods to make its standard charge information public:

  • Machine-Readable File: a single file that shows your hospital’s standard charges for all items and services. The file must be digital and readable by standard computer systems.
  • Consumer-Friendly Display: a display that includes your hospital’s standard charges for at least 300 shoppable services. These must include as many of the 70 CMS-specified shoppable services that your hospital offers. CMS allows you to display this information via a single file or an out-of-pocket estimator tool. The estimator must take patient insurance coverage details into account when calculating out-of-pocket balances.

How CMS Monitors and Assesses Noncompliance

The hospital price transparency program enforcement update did not alter the compliance monitoring process. CMS performs both targeted and random audits to assess compliance with the program. CMS will continue to use three methods to accomplish this:

  • Reviewing complaints submitted from members of the public
  • Reviewing noncompliance analyses provided by individuals or entities
  • Auditing hospitals’ websites

CMS initiates full reviews if its analysis of complaints finds just cause. CMS maintains a tool on its website where the public can submit such complaints. Otherwise, CMS performs reviews on a random basis.

If a targeted or random audit determines that your hospital requires remediation, CMS will first consider the severity of the deficiencies. CMS’ findings will decide your case’s priority in the review process. Hospitals that have not published any charge information will be reviewed before hospitals that have published incomplete information.

CMS's Use of Automation for Compliance Reviews

As of April 2023, CMS had sent out over 730 warnings to noncompliant hospitals. 269 of these cases ended up needing to submit CAPs. Only four hospitals have received a CMP. With 30% of hospitals still failing to fully comply, CMS chose to automate parts of the review process for greater efficiency.

CMS now automatically groups submitted complaints into various categories based on hospital systems and file types. CMS credits the change with helping it boost case reviews from 30 – 40 per month to over 200. 

Hospital Price Transparency Enforcement FAQ

CMS maintains a list of frequently asked questions concerning the hospital price transparency program. These include new information pertaining to the CMS enforcement updates. Common questions include:

I've been issued a warning notice by CMS. What's the best way to get in touch with CMS to inquire about the shortcomings specified in the notice?

CMS has a designated email to handle written requests concerning compliance. Your hospital’s CEO/President or their authorized representative can write an inquiry to:

How do I authorize someone to talk to CMS about my organization’s warning notice?

Your hospital’s CEO/President can appoint an authorized representative to take over official communications regarding the compliance process. Your CEO/President must email CMS at stating their intent to appoint an authorized representative. The email must come from your CEO/President’s official corporate email address. It must include the appointed representative’s name, title, email, and phone number.

How exactly does the CMS calculate the Civil Monetary Penalty (CMP)?

CMS calculates the CMP bases on your hospital’s size as indicated by its total number of beds. Hospitals with fewer than 31 beds face a maximum penalty of $300 per day. Hospitals with 31 – 550 beds face a daily penalty equal to the number of beds multiplied by $10 (i.e., 100 beds equals $1,000 per day). Hospitals with more than 550 beds have a maximum daily penalty of $5,500.

The current CMP amounts are for 2023. The Office of Management and Budget will annually review the amounts and update them according to federal guidelines. CMS provides a table  to illustrate the current CMP amounts:

Number of Beds Maximum Penalty Applied Per Day Total Maximum Penalty Amount for full Calendar Year of Noncompliance
30 or fewer $300 per hospital $109,500 per hospital
31 up to 550 $310 - $5,500 per hospital (number of beds times $10) $113,150 - $2,007,500 per hospital
Greater than 550 $5,500 per hospital $2,007,500 per hospital

Why does the CMP calculation use a scaling factor?

During the first year of the transparency program, CMS maintained a maximum penalty of $300 per day for all hospitals. However, initial studies showed a high rate of noncompliance among hospitals. CMS revised the policy starting on January 1, 2022 to make the CMP better reflect hospital size and resources. CMS also uses the sliding factor to account for the severity of violations. 

What’s the source of data used for determining the number of beds in the calculation?

CMS pulls vast amounts of data from Medicare-contracted hospitals. CMS uses this data to create comprehensive cost reports that detail facility traits and financial data. Hospital administrators regularly certify the accuracy of this data.

How will CMS determine bed count if a hospital isn’t Medicare-enrolled?

CMS will request specific documentation from your non-contracted hospital to determine the number of beds. CMS will automatically apply a CMP of 5,500 per day if your hospital doesn’t provide the requested information.

Can a hospital appeal a CMP?

CMS does allow you to appeal a CMP if you disagree with the amount of the penalty or believe it should not be levied. You can request a hearing with an Administrative Law Judge. Follow the instructions on your CMP notice to make an appeal in writing.

How long does a hospital have to appeal?

You have 30 days from the date of issuance of the CMP notice to file an appeal. You can receive approval to file an appeal later if circumstances beyond your control prevent timely filing.

What are the most common “deficiencies” seen by the CMS?

CMS found that most deficiencies occur with machine readable files. Specific issues causing noncompliance in this area include:

  • Failing to label negotiated standard charge rates with their corresponding third-party payer.
  • Including only some the standard charge categories.
  • Not publicizing a single file with the standard charge information.

CMS also found common issues with consumer-friendly displays. These include:

  • Missing certain data components such as billing codes or ancillary charges.
  • Lacking a price estimator tool or list of standard charges clearly showing shoppable services.

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