On November 2nd, CMS released the long-awaited CY 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule. This specifies the Outpatient & ASC payment rates for 2022, reverses course on the elimination of the inpatient-only list, maintains the ASP rate adjustment for separately payable drugs through the 340B program, and - pertinent to this blog post - enhances enforcement of price transparency compliance.
Specifically, the Final Rule firmly codifies increased civil monetary penalties for non-compliant hospitals, adds state forensic hospitals to the list of excluded entities, and provides more clarity around the definition of public accessibility to machine-readable files. We at Turquoise believe that this is a significant step forward on the path to a more transparent industry, and interpret this Final Rule as a signal that CMS is steadfast & committed to the worthy cause.
Larger Penalties for Non-Compliance
The first of the three components of the Final Rule (as it pertains to Price Transparency) is increased civil monetary penalties (CMP) for non-compliant hospitals. CMS states that their justification for upping the ante when it comes to penalizing non-compliant hospitals is due to (drumroll, please) widespread non-compliance. In fact, at the time of this blog post, we estimate that only 71% of hospitals subject to the regulations have posted any sort of machine-readable file, and of that percentage, 64% meet the minimum threshold we deem necessary to qualify as fully (or even, mostly) compliant. If you’re curious as to how well your hospital complies with price transparency, click here!
Many of those who objected to the proposed rule in June of 2021 claimed that the non-compliance was a result of a myriad of reasons; including the COVID-19 public health emergency, perceived ambiguity regarding what constituted compliance, and a lack of resources to actually comply. Despite their objections, CMS remained unwavered and imposed an increase from the flat 2021 $300 per day penalty, to a sliding scale penalty up to $5,500 per day, depending on the hospital’s size.
Note: CMS indicates they will continue to notify hospitals of their non-compliance, and request a corrective action plan prior to imposing any CMP
Starting in January of 2022, the following penalties will apply to non-compliant hospitals fitting the respective bed-count criteria:
This means that for a large 550+ bed hospital, continued non-compliance into 2022 will result in an 18x plus increase from 2021. For some of the largest health systems in the US, this will exceed a $100M annual fine. We anticipate that this less-than-subtle nudge from CMS will encourage a much higher level of compliance in the months to come.
Forensic Hospitals Now Excluded
The second component of the Final Rule expands the list of entities excluded from the scope of the regulation to include state-licensed forensic hospitals. Currently, excluded entities consist of other state or federally funded facilities such as Indian Health Services (IHS) & VA (Veterans Affairs). CMS acknowledges that a state forensic hospital fits this exclusion criteria because: their services aren’t available to the general population, and they lack a diversified payor mix, which by nature, means that they do not possess any negotiated rates. CMS estimates that there are currently 111 hospitals that can be classified as such.
Accessibility of Machine Readable Files
The third & last component of the Final Rule relates to the accessibility of machine readable files to the public. Specifically, CMS aims to remove common barriers between the public and a hospital’s machine-readable files by significantly minimizing the scope in which “accessibility” can be interpreted. Many hospitals have, to-date, intentionally (or, possibly unintentionally) employed tactics that make locating & downloading machine-readable files either difficult or virtually impossible. Some common tactics include: placing the links to the machine-readable files in a spot that’s unrelated to patient financial services/insurance, requesting the user to create an account, or requiring CAPTCHA challenge-response questions as a prerequisite to access. CMS explicitly states in the Final Rule that hospitals must: “ensure that the standard charge information is easily accessible, without barriers, including, but not limited to, ensuring the information is accessible to automated searches and direct file downloads through a link posted on a publicly available website.” We believe that this language is more prescriptive than the prior regulatory language, and should assist in breaking down the barriers between the public and machine-readable files.
In closing, the Final Rule is an unequivocally clear message from CMS that price transparency is here to stay, and that non-compliance will be reciprocated with penalization. Enabling consumers to make informed financial decisions regarding their health care options is predicated on hospitals fully complying with the regulations via good faith effort. We at Turquoise are committed to playing our part to ensure a fully transparent future, and are delighted in CMS’s shared dedication to that end. If you want to learn more about who we are and what we do, please visit our website at www.turquoise.health.
Stay tuned for more legislative blog posts regarding Price Transparency, Transparency in Coverage, and the No Surprises Act.