Hospital price transparency rule penalties may increase

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The Centers for Medicare and Medicaid Services (CMS) has proposed increasing the penalty for violations of the hospital price transparency rule in the proposed outpatient pay rule announced on July 19, 2021.  

Hospitals currently face a maximum penalty of $300 per hospital, per day, meaning that the maximum annual penalty is $109,500. The proposed rule would increase the penalty for hospitals with more than 30 beds to $10 per day and per bed, up to a maximum of $5,500 per day. This would mean that the new maximum annual penalty would climb to over $2 million.

The price transparency rule went into effect on January 1, 2021, and various studies and media reports have shown that most hospitals are not fully in compliance with its requirement to publish two lists of prices. In April, CMS confirmed that it had begun to send warning letters to hospitals it deems out of compliance with the rule. The agency has previously indicated that enforcement of the rule would generally occur in the following order: (1) written warning; (2) corrective action plan; and (3) civil monetary penalty.

The Department of Health and Human Services Secretary Xavier Becerra said in a statement, “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.” It remains to be seen whether an increase in penalties will prompt reluctant hospitals to comply with the rule. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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