Proposed legislation would double penalties on hospitals that fail to comply with transparency rules

Hospitals that fail to comply with federal price transparency rules would face harsher penalties under legislation proposed by U.S. Sen. John Kennedy, R-La.

“Patients deserve to know the true cost of hospital items and services,” he says. “I wrote this bill to protect patients by making hospitals clarify how much a visit might really cost so that patients can make informed choices about their care.”

The Hospital Price Transparency Rule requires hospitals to establish and make public a list of prices charged for items and services. Hospitals also must display charges in a consumer-friendly manner. To date, only two hospitals — Northside Hospital Atlanta and Northside Hospital Cherokee in Canton, Ga. — have been fined for violating the laws. However, a recent study of 2,000 hospitals found that only 489 — or 24%– were fully compliant.

In January 2022, the government implemented higher penalties on hospitals that fail to comply with the transparency rule. The Centers for Medicare & Medicaid Services requires non-compliant hospitals with 30 or fewer beds to pay a penalty of $300 per day; those with 31 to 550 beds to pay between $310 and $5,500 per day; and those with more than 550 beds to pay $5,500 per day.

Kennedy’s bill, dubbed the Hospital Transparency Compliance Enforcement Act, would:

• Double current penalties on non-compliant hospitals to $600 per day for hospitals with 30 or fewer beds, $620 to $11,000 per day for hospitals with 31 to 550 beds; and $11,000 per day for hospitals with more than 550 beds.
• Prohibit hospitals from shielding information on their websites using webpage coding.
• Give noncompliant hospitals 60 days after notice of noncompliance to pay their monetary penalty.
• Require the CMS to publish the names of noncompliant hospitals.

The American Hospital Association and other groups have pushed back against price transparency compliance reports from groups other than CMS. The association has argued that these groups are ignoring CMS guidance on aspects of the rule, such as how to fill in an individual negotiated rate when such a rate does not exist because of patient services being bundled and billed together.

“The AHA strongly cautions against buying into misguided assessments of hospital compliance with the price transparency rule,” Ariel Levin, the association’s director of coverage policy, said last year. “Hospitals are working hard to provide accurate financial estimates for patients. This is challenging work and requires consideration of both hospital rates and patients’ health care coverage.

Related: Health care price transparency rules are now in effect, so why isn’t it the norm?

“We appreciate CMS’ continued commitment to work with hospitals toward compliance, and the AHA will continue to seek opportunities to work constructively and serve as a resource for members and CMS with the goal of getting patients the best possible information.”