Hospitals, medical groups push back on ONC's 'excessive' and 'overly punitive' data blocking penalties

Hospitals and clinician groups are pushing back on federal regulators' proposal to enforce data blocking rules, arguing that the penalties are "excessive," "unfair" and will discourage participation in value-based care programs.

The Department of Health and Human Services (HHS) released a long-awaited rule in October that outlined “disincentives” for eligible hospitals or critical access hospitals, clinician groups and accountable care organizations that are found by the HHS Office of Inspector General (OIG) to have committed information blocking — defined in the 21st Century Cures Act as the intentional interference with access, exchange or use of electronic health information except when required by law or under certain exceptions.

Unlike the direct penalties HHS began enforcing for health IT entities in September, the department said it plans to target those providers’ participation in existing Centers for Medicare & Medicaid Services (CMS) programs.

Providers determined to have committed information blocking would face changes to their status in certain Medicare programs and, subsequently, a hit to program payments, according to the Department of Health and Human Services' proposed rule. Enforcement would begin once the proposed rule is finalized. 

An offending hospital or critical access hospital would no longer be recognized during an applicable reporting period as a meaningful EHR user under the Medicare Promoting Interoperability Program. The former entity would lose 75% of the annual market basket increase while a critical access hospital would have payments reduced from 101% to 100% of reasonable costs associated with successful program participation, according to the proposed rule.

Physician groups determined to have committed information blocking would no longer be meaningful users of certified EHR technology under the Promoting Interoperability category of the Medicare Merit-based Incentive Payment System during a performance period.

Comments on the proposed rule were due on Tuesday, January 2.

The disincentive structure proposed in the rule is "excessive, potentially overlapping and unfair," the American Hospital Association said, "so much so that it may threaten the financial viability of economically fragile hospitals, including many small and rural hospitals."

"It appears that CMS and ONC [the Office of the National Coordinator for Health IT] underestimated the real financial impact of a 75% decrease in yearly market basket updates for IPPS hospitals and a 1 percentage point reduction in the reimbursement for CAHs," AHA said.

In the proposed rule, CMS and ONC reference a hypothetical scenario of a proposed 3.2% market basket increase and a reduction of three-quarters of that percentage increase if the disincentive was applied.

Under this scenario, CMS and ONC estimated a median disincentive amount of $394,353 and a range of $30,406 to $2,430,766 across eligible hospitals. "Using the formula described in this scenario, several of AHA’s members estimated what their own penalties might be and found that the impact could be more than three times the upper-level number quoted in the range published in the rule, and an average impact that is nearly 10 times higher than median quoted in the rule," AHA wrote in its comments on the rule.

The disincentives are based on variable aspects of provider payment and, as a result, would create an unfair and confusing framework in which disproportionate punishment could be levied for the same offense depending on the year of the offense and how long it takes for the violation to be referred to CMS, AHA wrote.

AHA also took issue with how HHS OIG will determine if information blocking has occurred, saying the process is "unclear," including the appeals process, "giving this proposed rule the appearance of being arbitrary and capricious."

America's Essential Hospitals, representing 300 member hospitals, also described the proposed disincentives as "excessively punitive" and come at a time when healthcare providers continue to be in a precarious financial position. "The magnitude of the penalties would be even greater for essential hospitals, because they tend
to be larger hospitals with high numbers of Medicare discharges and complex cases," the organization wrote in its comments. "The higher volume of Medicare discharges and higher case complexity means an essential hospital subject to a disincentive would have the reduced market basket percentage apply to a larger number of complex cases for these hospitals, translating into larger payment reductions. This would be unsustainable for these hospitals, which already operate on deeply negative margins."

These proposed disincentives are also premature because there is still significant confusion about the types of conduct that would constitute information blocking, the organization noted.

Many medical groups voiced concerns about how the proposed financial penalties could impact physician practices. The disincentives may disproportionately impact small and independent physician practices and others that may not be able to achieve the proposal’s intent of deterring information blocking, the American Academy of Family Physicians wrote in its comments.

Significant knowledge gaps still exist regarding the implementation and enforcement of the rules, the group wrote.

Many provider groups urged HHS to use corrective action plans and education to effectively remedy information blocking allegations instead of significant financial penalties.

The American Medical Association (AMA) also argued the proposed disincentives "unfairly and arbitrarily penalize physicians." The AMA urged HHS officials to prioritize education for physicians related to perceived information blocking and work with practices to facilitate corrective action, "rather than imposing harsh punishments that are not calibrated to the underlying alleged misconduct."

"Starting with notice and corrective action is consistent with enforcement approaches undertaken in various other HHS efforts, especially when the underlying regulatory scheme is novel and complex," the AMA wrote in its comments.

The proposed rule offers an "overly punitive approach to addressing information blocking, and specifically targets physicians practicing in value-based care arrangements," AMGA, representing more than 440 multispecialty medical groups, wrote in its comments.

The rule outlines punitive disincentives for providers participating in the MIPS program by zeroing out the promoting interoperability (PI) category. 

"With this category contributing 25% to the total MIPS score, clinicians penalized for information blocking risk being capped at a maximum score of 75, likely leading to a penalty under the 2024 MIPS performance threshold. Similar to the penalty outlined for ACO participants, the suggested measure of denying clinicians the opportunity to earn a positive payment adjustment undermines the MIPS program and is overly punitive. AMGA strongly recommends that CMS reconsider and refrain from finalizing the penalty as proposed," the group wrote.

Under the proposed rule, accountable care organizations, ACO participants or ACO providers/suppliers determined to have committed information blocking would be barred from participating in a Medicare Shared Savings Program ACO for at least a year.

Groups representing physician practices like the Medical Group Management Association were particularly concerned with these measures.

Removing ACOs, or providers participating in an ACO, from MSSP works against CMS’ intention of
having all Medicare beneficiaries in an accountable care relationship by 2030, MGMA wrote in its comments.

"There are myriad negative effects that would result from exclusion such as harming the ability of ACOs to leverage their infrastructure to reduce costs and improve care, damaging vital data collection, increased administrative and financial burdens and more. Excluding practices and ACOs from participating in MSSP runs counter to the transition to value-based care and undercuts the ability of providers within the ACO framework to succeed," the organization wrote.

Premier, a healthcare improvement company, also noted that the disincentives, as crafted, would "create a chilling effect upon future ACO participation in the MSSP program." The organization called for HHS to HHS to remove the MSSP disincentive and work with stakeholders to create a disincentive framework that provides educational and technical assistance first and then appropriate penalties if corrective action is not taken.

The National Association of ACOs raised concerns with the proposal to prohibit ACO participation as a penalty for information blocking and stressed that this approach penalizes patients by blocking participation in value models aimed at improving patient care. As proposed, CMS and ONC would be applying multiple duplicative penalties to clinicians in ACOs," which would be "overly punitive and create undue confusion and complexity," the organization said.

CMS and ONC must more clearly outline the appeals rights of ACOs and the clinicians in an ACO, which should be aligned with those afforded to health IT developers and vendors, NAACOS said in its comment letter.

HHS' proposed rule would apply penalties only to healthcare providers that participate in certain Medicare programs and not to all healthcare providers that are covered actors under the information blocking regulations, according to an analysis from law firm McDermott, Will and Emery.

HHS has not proposed any disincentives for healthcare providers that do not participate in the Medicare Promoting Interoperability or Medicare Shared Savings Program (MSSP), or that serve a limited number of Medicare beneficiaries.

Transparency provisions included in the proposal would see HHS post information about OIG’s determinations online. That information would include the information blocking practices, the providers who committed the information blocking, settlements and disincentives, the department said.

“We are confident the disincentives included in the proposed rule, if finalized, will further increase the appropriate sharing of electronic health information and establish a framework for potential additional disincentives in the future,” HHS Secretary Xavier Becerra said in a statement.