The Centers for Medicare & Medicaid Services appears to be enforcing its price transparency rule more seriously. The agency recently fined two hospitals for alleged violations of the rule.

Last week, CMS issued fines to Frisbie Memorial Hospital in Rochester, New Hampshire and Kell West Regional Hospital in Wichita Falls, Texas. The former was fined $102,660, and the latter received a $117,260 fine.

These fines are only the third and fourth penalties issued by CMS since its price transparency rule took effect on January 1, 2021. The other two came nearly a year ago, in June 2022 — Northside Hospital in Atlanta was fined $883,180 and Northside Hospital Cherokee in Canton, Georgia was fined $214,320.

CMS’ rule aims to make hospitals’ pricing data more accessible to patients so they can compare costs and make more informed decisions about the healthcare services they choose. The law requires all hospitals to post their gross charges, payer-specific negotiated charges, de-identified minimum negotiated charges, de-identified maximum negotiated charges and cash prices on their websites in a machine-readable file. It also mandates that hospitals must publish pricing for the 300 most commonly used services to their website in a consumer-friendly manner.

According to the notices CMS sent to Frisbie and Kell West, both hospitals were issued warnings from the agency in the past — Frisbie in August 2021 and Kell West in July 2022.

CMS reviewed Frisbie’s machine-readable file in October 2022 and decided the hospital still wasn’t compliant with the price transparency rule. The next week, the agency issued a request for the hospital to submit a corrective action plan.

When it issued its fine, CMS said that Frisbie had neither submitted the plan nor responded to its attempts to contact the hospital.

In November 2022, Kell West was also asked to submit a corrective action plan. The hospital did so the next month and said the issue would be corrected by February 15. 

On January 6, CMS asked for the hospital’s plan to be revised, and Kell West’s revised plan was approved by the agency on January 25. On March 31, CMS reviewed the hospital’s website and determined that it was still not in compliance with the rule’s requirements for displaying hospital charges and shoppable services in a consumer-friendly manner. 

The hospitals have 30 days to appeal the fines. Neither Frisbie nor Kell West immediately responded to MedCity News’ requests for comment.

It’s unclear why CMS has selected the four hospitals it has for penalization. Hospitals across the country have had a difficult time complying with the agency’s rule. In June of last year — a year and a half after CMS began enforcing the rule — a JAMA study revealed that fewer than 6% of hospitals were fully compliant.

There are a few reasons why it’s so challenging for hospitals to keep up with CMS’ requirements. One is that there are dozens of permutations of what a procedure could actually cost. Nick Patel — chief digital officer at South Carolina-based Prisma Health — told MedCity News last year that it is virtually impossible to create an accurate estimate of what a patient will end up paying. 

For example, the true cost of a gallbladder removal could come out to be thousands of dollars more than the amount a patient saw on a price estimator tool due to surgical adhesions, excessive bleeding or other unforeseen complexities that could arise during the surgery. 

Another reason price transparency is tricky for hospitals is that patients mainly just care about what their out-of-pocket expense will be, not the “retail” or “non-adjusted” cost. Since this varies patient-to-patient based on their health plan and deductible, the technical lift for hospitals to calculate accurate estimates is quite a heavy burden.

Care variance within the healthcare industry also makes it tough for hospitals to provide effective price transparency tools. The documentation, coding and other ancillary charges involved in the medical billing process are quite complex, and surgeons may have different preferences for the amount of equipment they use for each case, Patel pointed out.

Still, CMS announced on Wednesday that it is updating its enforcement process for the rule.

The agency will continue to require hospitals deemed out of compliance with the rule to submit a corrective action plan within 45 days from when CMS issues its request for one. CMS will also now require hospitals to be in full compliance with the rule within 90 days from when the agency issued its corrective action plan request. Before, CMS allowed hospitals to set its own completion date for their corrective actions.

In addition, CMS will begin automatically imposing civil monetary penalties on hospitals that fail to submit a corrective action plan within the 45-day time frame.

As of this month, CMS said it has issued more than 730 warnings and 269 corrective action plan requests to hospitals.

Photo: sinemaslow, Getty Images