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CMS Issues First Fines to Hospitals for Price Transparency Rule

Analysis  |  By Jay Asser  
   June 15, 2022

An Atlanta health system was handed a penalty of more than $1 million for failing to comply with price transparency laws.

Two Atlanta hospitals were the first to be fined by CMS for violating the price transparency, racking up penalties of more than $1 million.

After only issuing warnings following the price transparency law going into effect on January 1, 2021, CMS levied fines of $883,180 to Northside Hospital Atlanta and $214,320 to Northside Hospital Cherokee.

The hospitals, which are part of the same health system, failed to comply with CMS requirements by not making public their list of standard charges for services in a machine-readable file and single digital file.

CMS first issued warnings last year to Northside Hospital Atlanta in April and Northside Hospital Cherokee in May before completing a review of the facilities in September 2021.

The civil monetary penalties were calculated as $300 per day of noncompliance, combined with the size of the hospital based on the number of beds.

The hospitals are required to pay the fines in full within 60 days from the date of the notice or can request an appeal hearing before HHS.

"CMS expects hospitals to comply with the Hospital Price Transparency regulations that require providing clear, accessible pricing information online about the items and services they provide," Meena Seshamani, CMS deputy administrator and director of the Center for Medicare, said in a statement.

"This enforcement action affirms the Biden-Harris Administration's commitment to making health care pricing information accessible to people across the country and we are committed to ensuring that consumers have the information they need to make fully informed decisions regarding their healthcare."

Northside Hospital Atlanta and Northside Hospital Cherokee were only two of hundreds of facilities across the country to receive warning letters from CMS as of early June. A total of 352 warnings have been issued, including 157 cases requiring a request for a corrective action plan and 171 hospitals who addressed their issues to have their case closed.

A recent study by JAMA evaluated by the price transparency rule six to nine months after it took effect, finding that hospitals in rural, more concentrated markets with less competition were less likely to comply.

Of the 5,239 hospitals researched by the study, 51% (2,668) didn't have a machine-readable file or a shoppable display.

Meanwhile, revenue cycle leaders expressed their concern that the price transparency rule is too confusing and expensive to achieve its intended purpose in an April report by KLAS.

Most of the respondents in the report said significant resource investment is necessary to implement and sustain price transparency compliance. However, finding resources can be difficult as organizations weigh the financial burden of investing in a regulation that doesn't provide a return on investment, according to the report.

"Many organizations are not investing beyond the bare minimum requirements, and they don't plan to do more until there is further clarity around the regulations and the expectations going forward," the KLAS authors wrote.

Jay Asser is the contributing editor for strategy at HealthLeaders. 

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