Dive Brief:

• The Biden administration has fined two hospitals for noncompliance with federal price transparency rules that took effect last January, in regulators’ first enforcement salvo meant to encourage a more competitive and efficient market for medical services.
• Two Georgia facilities — both in the same system — have been fined a joint $1.1 million, the CMS said Tuesday.
• Data has shown that an overwhelming majority of hospitals aren’t complying with the CMS rules, which require hospitals to post prices online in a machine-readable and consumer-friendly format.

Dive Insight:

In 2019, the Trump administration finalized a proposal requiring hospitals to disclose five types of charges for items and services in an accessible online file, including negotiated rates with payers.

The regulations also require hospitals to publish standard charge information for 300 services that patients can schedule in advance, with the goal of making it easier for consumers to shop between services by injecting competition into the system and lowering prices.

Originally, the maximum annual penalty for noncompliance was $109,500 for large hospitals. However, the CMS increased the penalty to more than $2 million per hospital starting this year.

The CMS has been criticized for moving slowly to enforce the rules, which came into effect in January 2021 and have faced fierce opposition — including an ultimately fruitless lawsuit — from hospital groups.

Before enforcing the first price transparency fines this week, regulators sent warning letters to Northside Hospital Atlanta and Northside Hospital Cherokee and requested corrective action plans from the facilities, which are operated by Northside, a Georgia health system with five acute care hospitals.

The letters, dated Tuesday, detail alleged violations, including failures from both hospitals to post a comprehensive list of standard charges. Northside Hospital Atlanta told regulators in November that patients should call or email the facility for price estimates, and — during a CMS followup in January — said that it had removed all previously posted pricing files.

Meanwhile, the CMS was unable to find machine-readable files with standard charges for facility fees, or a consumer-friendly list of standard charges for 300 shoppable services at Northside Hospital Cherokee.

The CMS fined Northside Hospital Atlanta $883,180 and Northside Hospital Cherokee $214,320. The facilities could face additional civil monetary penalties if they don’t comply, regulators said.

“Should your hospital fail to notify the CMS that all noncompliance have been corrected, a CMP will continue to accrue until the date the CMS reviews your website and determines your hospital is in full compliance,” the CMS wrote in both letters.

The facilities have the option to appeal the charges within 30 days or pay them in full within 60 days.

Hospitals have slammed the rules, arguing that compliance is difficult and a lack of standardization in reporting could confuse consumers. Some researchers have agreed, noting that — while transparency is an important step — hospitals that do comply with the regulations vary in which prices they show, how they define price and which payer-negotiated rates they disclose, making it extremely difficult to pinpoint the true cost of a service.

And studies have shown adequate compliance with the rules is rare. In February, an analysis of 1,000 hospitals from a patient advocacy group found that 14% were in compliance with the rules. Another study published Tuesday in JAMA that analyzed more than 5,200 hospitals found just 6% had both an accessible file and a shoppable display, as per the regulations.