Hospital CFOs must stay vigilant about price transparency rules to avoid financial penalties.
Since Congress enacted the Hospital Price Transparency rule in 2021, the Centers for Medicare & Medicaid Services (CMS) has issued fines to 17 hospitals, some nearing $1 million.
Most recently, Jackson Memorial Hospital was fined $871,122 in July 2024, Baytown (Texas) Medical Center was fined $50,711 in December 2022, and West Chase Houston Hospital was fined $44,251 in December 2024.
These hefty fines to providers for failing to comply with federal price transparency rules underscore the increasing scrutiny on provider pricing practices. The penalties are part of a broader push by the federal government to ensure that healthcare prices are accessible and understandable for patients.
But these fines are not just a matter of regulatory compliance; they represent a growing concern for hospital CFOs and finance teams across the country. If they continue, these penalties can have significant financial and reputational consequences for health systems.
The Price Transparency Mandates
The price transparency laws require hospitals to publicly display their standard charges for all services. This includes prices for both insured and self-pay patients, and for the first time, hospitals must publish machine-readable files containing a comprehensive list of prices for items and services. Additionally, hospitals are expected to provide clear, consumer-friendly information that allows patients to estimate the cost of care before receiving services. The goal is to empower consumers to make more informed decisions and stimulate competition within the healthcare market.
But compliance has been sluggish, forcing CMS to ramp up enforcement over the past few years, issuing fines for hospitals that fail to comply or provide incomplete, inaccessible, or unintelligible pricing information. The most recent penalties reflect CMS’ commitment to holding healthcare systems accountable for transparency and pushing the industry toward greater accountability.
Some experts argued that, given the complex nature of healthcare billing, it’s too difficult for hospitals to list accurate pricing online. There was some push-back in the industry at the onset, but health systems are becoming more adept at meeting the rules.
While the task of updating price information does not fall to the CFO specifically, a massive fine could wreak havoc on a hospital’s finances. CFOs should ensure their organization can avoid this whenever possible.
The Financial Impact
For CFOs, the fines represent more than just a regulatory headache. The financial repercussions are real, with penalties escalating based on the size of the health system and the nature of the violations. Hospitals are required to pay fines for every day they remain out of compliance, making it crucial for finance teams to stay on top of these regulations. Even more, non-compliance with price transparency laws can damage one’s reputation. As more patients and insurers demand pricing clarity, failing to meet transparency rules could lead to a loss of business, lower patient satisfaction, and potential legal challenges.
The financial penalties could also indirectly impact other areas of hospital operations. Resources that might otherwise be allocated to improving patient care or operational efficiency could now be diverted toward compliance measures or paying fines. Additionally, the reputational damage could affect negotiations with insurers and suppliers, potentially reducing reimbursement rates or increasing operational costs.
The CFO To-Do List: Navigating Compliance
To avoid the fines and reputational damage associated with price transparency violations, CFOs should take several proactive steps to ensure compliance with CMS rules:
- Review and Update Pricing Information Regularly: CFOs must ensure that their health system’s pricing data is current, accurate, and easily accessible. Regular audits of pricing files and consumer-facing tools should be conducted to ensure they meet CMS requirements.
- Invest in Technology Solutions: Many health systems are investing in software and platforms that help manage and display price data efficiently. These tools can help ensure that pricing information is updated in real-time and is presented in a user-friendly format. CMS also has provided hospitals with resources to help them comply, such as an online validator tool and a template for creating machine-readable files.
- Develop a Dedicated Compliance Team: Maintaining transparency is not a one-time effort but an ongoing process. CFOs should consider establishing a team dedicated to compliance, ensuring that all relevant departments (finance, IT, marketing, and legal) are aligned with the transparency goals.
- Train Staff on Legal and Operational Requirements: It’s essential that the finance team, as well as other departments, understand the nuances of the price transparency regulations. A little training here will help prevent inadvertent violations that could lead to costly fines.
- Communicate with Stakeholders: Open communication with patients, insurers, and other stakeholders about price transparency efforts can foster goodwill and mitigate any negative publicity.
Marie DeFreitas is the CFO editor for HealthLeaders.
KEY TAKEAWAYS
CMS has fined 17 hospitals since 2021 for violating price transparency rules.
CFOs can help ensure that pricing data is accurate, up-to-date, and accessible, requiring regular audits and technological investments to maintain compliance.
Establishing a dedicated compliance team and educating staff about price transparency rules are key steps to avoiding fines.