Hospitals being fined for failing to comply with federal law

[Editor’s note: This story originally was published by Real Clear Health.]

By Cynthia A. Fisher
Real Clear Health

The Biden administration has just turbocharged hospital price transparency. Last week, the Center for Medicare and Medicaid Services (CMS) announced its first fines on hospitals for violating the federal hospital price transparency rule that took effect one and a half years ago on January 1, 2021. Better late than never.

CMS declared it’s issuing financial penalties totaling nearly $1.1 million on two affiliated Georgia hospitals: Northside Hospital Atlanta and Northside Hospital Cherokee. The long-overdue fines follow many months of public pressure, including a hard-hitting NBC Nightly News segment last week.

 

With multiple reports showing widespread hospital noncompliance with this rule, only fining two hospitals is a small step. Thousands more hospitals nationwide have flouted this order to publish discounted cash prices and all contracted rates by insurance plan. New JAMA research released last week finds that only 6% of hospitals are complying with the rule. Using more updated data, a recent study by PatientRightsAdvocate.org demonstrates only 14.3% of American hospitals are following it.

 

The PRA study concludes that none of the 188 hospitals in America’s largest hospital chain, HCA Healthcare, are in compliance. HCA made $59 billion in revenue in 2021 and $7 billion in profit. Such noncompliant hospitals are bolstering their earnings by blinding patients to prices then blindsiding them with massive bills that they often never would have agreed to weeks and months after care. 

 

By holding the nation’s largest hospital chain accountable, CMS has a huge opportunity to change the course of healthcare in the country. It can restore trust, choice, and competition in the U.S. healthcare system and encourage the 64% of Americans who avoid care each year for fear of financial ruin to return. Polls show nearly 90% of Americans support federal price transparency rules. 

 

Nevertheless, finally issuing real financial penalties is a giant leap toward meaningful price transparency. Hospitals now have a clear financial incentive to follow the law. Even more significant than the monetary impact of these fines is the associated reputational damage. Hospitals are now being named and shamed for their noncompliance. CMS has put them on notice: Post your actual prices or risk being outed to your communities as federal lawbreakers.

 

CMS can build on these financial penalties to achieve broader and faster price transparency compliance. An immediate next step is issuing fines to dramatically more hospitals. The agency can also increase the size of financial penalties, implement clear price data disclosure standards, and clarify that price estimates can’t be used instead of actual prices. Estimates are faux transparency that don’t provide financial certainty and leave consumers on the hook for unknown, wild price deviations.

 

CMS can also carry this stepped-up enforcement approach into next month’s enactment of the health insurance price transparency rule. This order requires insurers to publish their historical claims data and all secret negotiated prices so that patients can access real prices wherever they get care. Timely and robust enforcement of this rule can usher in price transparency systemwide and unleash a functional, competitive healthcare marketplace. 

 

When consumers can see prices wherever they receive care, they can enjoy financial certainty and avoid price gouging. They can dramatically reduce their care and coverage costs through choice and competition. No consumer will tolerate wild price fluctuations of ten times or more for the same care at the same hospital when prices are known upfront.

 

Employers, who provide most Americans with health coverage, can direct ensuing savings to boost workers’ wages, helping them overcome today’s historic inflationary pressures. Actual, upfront prices prevent overcharging, upcoding, and billing fraud, reversing runaway healthcare prices bankrupting the nation.

 

CMS’ enforcement actions last week add to the growing momentum behind healthcare price transparency. Patients and all healthcare consumers now must exercise their power to capitalize on it.

Cynthia A. Fisher is a life-science entrepreneur, founder and chairman of PatientRightsAdvocate.org, and founder and former CEO of ViaCord.

[Editor’s note: This story originally was published by Real Clear Health.]

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