Hospitals could face $2 million fine for not disclosing prices under proposed Biden rule

By Tami Luhby, CNN

The Biden administration is doubling down on a Trump-era rule that requires hospitals to disclose the rates they privately negotiate with insurers.

A large number of hospitals have yet to comply with that historic rule, which went into effect January 1 and also requires them to provide in an online, searchable way the rates for 300 common services, such as X-rays, outpatient visits, Cesarean deliveries and lab tests. In addition, hospitals must disclose the amount they are willing to accept in cash.

The Centers for Medicare and Medicaid Services is proposing increasing the penalty for not complying with the rule, which is currently up to $300 a day. The move follows an executive order issued by President Joe Biden earlier this month that directed the Department of Health and Human Services to support existing hospital price transparency rules.

CMS wants to hike the fine to as much as $5,500 for hospitals with more than 30 beds, according to the proposed rule, released Monday. Smaller hospitals would still face a penalty of $300 a day.

The minimum annual penalty would be $109,500 per hospital, which is the current fine, but the maximum would increase to as much as $2 million per hospital.

Some 6,000 hospitals are subject to the price transparency rule.

CMS said it takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online.

“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,” said HHS Secretary Xavier Becerra.

Only 5.6% of hospitals were compliant with the rule, according to a recent review by PatientRightsAdvocate.org, a consumer group that looked at a random sample of 500 hospital websites.

Trump rule

The rule stems from an executive order that then-President Donald Trump issued in 2019. His administration argued that such price transparency will allow patients to shop for lower-priced medical services and help reduce health care costs overall.

Health policy experts aren’t so sure, however. The theory is that patients will visit the hospital websites and choose lower-priced options, which will lead to competition in the US health care system and drive prices down. But studies show that previous transparency efforts haven’t worked.

Only 9% of adults know that hospitals must disclose this information online, according to a recent Kaiser Family Foundation health tracking poll. And only 14% say they or someone in their family went online to research the price of treatment at a hospital over the past six months.

And hospitals, which unsuccessfully fought the rule in court, say it’s an extra burden on them while they are battling the coronavirus. The industry argues that the disclosure could confuse patients rather than inform them. It does not tell consumers what out-of-pocket charges they may face, since the posted rates don’t account for a patient’s personal deductible or copay requirements.

Insurers must disclose out-of-pocket costs in 2023

A separate rule, which was made final in October and takes effect in 2023, requires insurers to provide an online shopping tool that allows consumers to see negotiated rates with providers and gives them estimates of their out-of-pocket costs for 500 common shoppable items and services.

The following year, insurers must show all remaining procedures, drugs and other items.

This measure was prompted by feedback that consumers are more interested in what they are on the hook for based on their insurance plans’ deductibles and copays.

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