Hospital groups push back against stiffer penalties for failing to publish prices

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Hospital groups say facilities have prioritized fighting COVID-19 rather than complying with a price transparency rule that requires them to post prices online. (Getty/everydayplus)

Hospital industry groups are pushing back against a proposal to jack up fines for health systems that don't publish their prices, arguing that facilities are putting all their resources behind combating the COVID-19 pandemic.

The groups wrote in comments to the 2022 Hospital Outpatient Prospective Payment System (OPPS) rule strongly opposing a proposal to apply fines for noncompliance with a price transparency requirement on a per-bed basis. The current rule fines hospitals $300 a day.

The Centers for Medicare & Medicaid Services (CMS) wrote in the proposed payment rule released in July that hiking the fine could lead to greater compliance. The agency said its own independent audits and outside analyses have found widespread noncompliance with a regulation that requires facilities to post payer-negotiated rates online.

But the American Hospital Association (AHA) charged that “there is no evidence that the current penalty amount impacted early compliance with this rule,” according to the group’s comments. “In fact, to date, CMS has not actually issued any penalties.”

CMS has sent more than 100 warning letters to hospitals for noncompliance with the Trump-era regulation. If a hospital doesn’t turn things around, it will face a penalty of $300 a day for each day of noncompliance.

The agency proposed back in July to keep the $300 a day penalty for smaller hospitals with 30 or fewer beds. However, it would also apply a penalty of $10 per bed a day for hospitals that have more than 30 beds, and the penalty cannot exceed $5,500 a day.

A full year of noncompliance could cost a hospital more than $2 million a day, the agency said in a release back in July.

The agency said the penalty hike is in response to concerns from consumers about widespread noncompliance with the rule that went into effect in January. A study published back in June in JAMA found that 83 out of 100 random hospitals were not compliant, and another analysis from the group PatientRightsAdvocate found that only 5.6% of hospitals analyzed were fully compliant.

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But hospitals charge that they are facing an unprecedented financial strain from the COVID-19 pandemic, and that has likely shifted facilities’ attention.

“The personnel required to comply with this rule have been overwhelmed with more pressing assignments, such as bringing hospital surge capacity online and assisting with the monitoring and tracking of vaccine distribution,” the AHA’s comments said.

CMS gave hospitals leeway on other federal requirements, and “such flexibilities should be granted for these policies as well,” AHA said.

If CMS moves forward with the proposed hike, it should be changed to not just reflect a hospital’s bed size but to also reflect progress hospitals have made in complying with the rule, hospital groups say.

“Hospitals may have invested already scarce resources to implement a comprehensive cost estimation tool that provides useful information that empowers consumers to make informed decisions about their care,” wrote America’s Essential Hospitals, which represents safety net providers.

The Association of American Medical Colleges also wants CMS to give hospitals more time if they do install the stiffer penalties. The group commented that CMS should delay implementation of the new penalties.

The group said hospitals should at least get one year after the end of the COVID-19 public health emergency, which is expected to run through 2021, until the new penalties go into effect.

But the stiffer penalties did get major support from powerful political figures.

Reps. Frank Pallone, D-New Jersey, and Cathy McMorris Rodgers, R-Washington, voiced support in a letter to Department of Health and Human Services Secretary Xavier Becerra. Pallone is the top-ranking Democrat, and Rodgers is the top Republican on the powerful House Energy and Commerce Committee.

“We are concerned with troubling reports of low hospital compliance with the final rule,” the lawmakers wrote.

Blasting 340B and site-neutral payment cuts … again

Hospital groups also made renewed pleas to CMS to halt continued cuts to the 340B drug discount program and to off-campus hospital clinics to bring Medicare payments in line with physician offices.

CMS is proposing to maintain a 22.5% cut to payments for certain drugs discounted under the 340B program, which requires drug companies to offer discounts to safety net providers in exchange for participation in Medicare and Medicaid. The cuts were first proposed by the Trump administration back in 2018, and CMS will continue to exempt rural sole community hospitals, children’s hospitals and certain cancer hospitals.

The proposed rule also continued a Trump-era cut to off-campus hospital clinics of 40% of the outpatient payment rate. The goal was to bring Medicare payments for such clinics in line with those to physician offices. The cut was originally installed in 2019.

The hospital industry has fought both cuts in federal court but has failed so far. The Supreme Court will hear in their next term a challenge brought by the AHA against the cuts.

Hospital groups decried CMS’ decision to continue the cuts in the OPPS.

America’s Essential Hospitals charged that since CMS has instituted the 340B cuts, hospitals have faced reduced drug payments of more than $6.5 billion.

“CMS has not analyzed whether the policy has met its intended goals, how it has affected patient access, whether it has lowered drug prices or how it has affected hospital operations,” the group charges. “In fact, drug prices have continued to rise since implementation of the policy and hospitals continue to see their operations affected by their declining outpatient margins.”