The Centers for Medicare and Medicaid Services (“CMS”) recently imposed financial penalties for the first time against two hospitals for failure to comply with the Hospital Price Transparency Rule requirements. According to the Notices of Imposition of Civil Monetary Penalty (“Notices”), which CMS posts on its website, the two hospitals were fined over $1,000,000 cumulatively for multiple violations.

The Hospital Price Transparency Rule requires that nearly all licensed hospitals post “standard charges” (defined to include the rates that the hospital has negotiated with each third-party payer) on their websites for every item and service they provide, beginning January 1, 2021.

The financial penalties for non-compliance can be up to $10 per day per bed for most hospitals, though hospitals with thirty beds or fewer are subject to a minimum penalty of $300 per day and hospitals over 550 beds a maximum penalty of $5,500 per day. CMS began auditing compliance with the Hospital Price Transparency Rule in early 2021. In most cases, non-compliant hospitals will receive warning letters and requests for corrective action plans before CMS imposes civil monetary penalties (“CMPs”).

First Reported Penalties

CMS issued the first Notices on June 7, 2022, to two hospitals that are in the same system. CMS found that the hospitals did not 1) Post a machine-readable file for each licensed hospital; 2) Post a machine-readable file containing a list of all standard charges for all items and services file (supplies, room and board and facility fees were not included); 3) Post the machine-readable file in a single digital file; 4) Use the required naming convention; or 5) Make available a consumer-friendly list of standards charges for a limited set of shoppable services. While some of these violations are “low hanging fruit” for CMS audits, the Notices also suggest CMS is reviewing the list of items and services that hospitals are making available and will cite hospitals that fail to include pricing information for every item and service a hospital provides.

The Notices also show that the hospitals had multiple opportunities to come into compliance with the Hospital Price Transparency Rule. CMS issued Warning Notices and requested Corrective Action Plans (“CAPs”) on more than one occasion. In fact, CMS noted that the hospitals removed pricing files during this time.

The larger hospital was fined $883,180 and the other hospital $214,320. CMPs will also continue to accrue until the hospitals notify CMS that they are complying or CMS reviews the websites and determines that the hospitals are in compliance with the Hospital Price Transparency Rule.

Practical Takeaways

In response to these initial penalties, hospitals should confirm that they are complying with the requirements of the Hospital Price Transparency Rule as interpreted by CMS. Hospitals that receive a Warning Notice of non-compliance should take necessary corrective action to resolve the non-compliance and respond to CMS requests in a timely manner. CMS is actively monitoring compliance and willing to enforce the Hospital Price Transparency Rule through financial penalties if needed.