The Centers for Medicare & Medicaid Services (“CMS”) issued the first round of civil monetary penalties to two hospitals in Georgia for failure to comply with the requirements of the Hospital Price Transparency Final Rule (the “Rule”) on June 7, 2022.

According to the Notices of Imposition of a Civil Monetary Penalty published on the CMS Price Transparency Website, Northside Hospital Atlanta (“Northside Atlanta”) and Northside Hospital Cherokee (“Northside Cherokee”) failed to publish their standard charges and provide access to a machine-readable searchable tool, which would include standard prices for the hospitals’ items and services. CMS took this action after both hospitals failed to respond to the Warning Notices and Requests for Corrective Action Plans issued by CMS.

Effective January 1, 2021, hospitals must publish a machine-readable file that discloses the hospital’s negotiated rates with health plans, gross charges, discounted cash prices, and de-identified minimum and maximum negotiated charges for all items and services. Additionally, hospitals must publish a consumer-friendly, searchable tool that displays in plain language the prices of 300 shoppable medical services that a consumer can schedule in advance.

To enforce the price transparency requirements, CMS can issue a warning notice, request a corrective action plan, and impose a civil monetary penalty, which will be published on the CMS website if issued. Civil monetary penalties will be calculated based on $10 per bed per day, with a minimum penalty of $300 per day and a maximum penalty of $5,500 per day of non-compliance.

CMS issued warnings and corrective action plan requests

CMS issued Warning Notices to Northside Atlanta on April 19, 2021 and to Northside Cherokee on May 18, 2021. Both hospitals failed to respond to the notice, according to CMS.Five months later, CMS issued Requests for Corrective Action Plans to both hospitals. Northside Atlanta acknowledged receipt of the Request for Corrective Action Plan, and argued that patients could request prices via a designated phone line or email inbox. CMS issued a Request for a Revised Corrective Action Plan on December 20, 2021, to which Northside Atlanta did not respond.

In contrast, Northside Cherokee did not respond to the Request for Corrective Action Plan. On January 11, 2022, CMS conducted technical assistance calls with both hospitals and confirmed that their non-compliance had not been corrected and that the hospitals intentionally removed all previously posted pricing filings. Following those calls, CMS issued additional Requests for Corrective Action Plans, to which the hospitals again failed to respond. Accordingly, CMS fined Northside Atlanta and Northside Cherokee $883,180 and $214,320, respectively. CMS levied a $300 per day penalty for non-compliance and a $10 per bed per day penalty specific to each hospital’s bed counts.

CMS is auditing websites and checking compliance

Since the effective date of the Rule, CMS has audited hospital websites and issued 352 Warning Letters. Although CMS has issued case closure notices to a significant number of the hospitals who received Warning Letters, approximately 160 hospitals have yet to achieve compliance, signaling that CMS may impose civil monetary penalties against other hospitals in the future. Hospitals should evaluate compliance with the Rule and take seriously any communications from CMS with respect to alleged non-compliance with the Rule.

Reed Smith will continue to track developments related to the Hospital Price Transparency Rule, including enforcement actions taken by CMS. Please reach out to the authors of this post or to the health care attorneys at Reed Smith if you have any questions.