Kennedy and Oz alert hospitals that penalties loom for price transparency noncompliance

The emphasis on enforcing and advancing healthcare price transparency ramped up this week in the Trump administration and on Capitol Hill.

HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz, MD, made an announcement on social media, saying more than 500 hospitals have not complied with changes to price transparency requirements that took effect Jan. 1, with enforcement beginning April 1.

The hospitals have received warning letters and, in some cases, requests for corrective action plans (CAPs) and have not heeded that communication, according to the announcement. The two leaders did not say exactly when penalties would be levied but indicated there will be no additional grace period.

“Our message to hospitals is simple: Post your real prices,” Kennedy said. “Come into compliance immediately or prepare for serious consequences. Don’t wait for a penalty notice. By then, it may be too late.”

The Associated Press obtained and posted a list of the hospitals that have not complied. Based on past instances of known noncompliance, warning letters sometimes are based on narrow technical issues rather than substantive violations.

New regulations are more exacting

Oz said the Biden administration did not adequately enforce price transparency rules and “even told hospitals they could get away with ballpark estimates, not real prices.”

Starting Jan. 1, hospital price transparency files were supposed to include metrics based on actual allowed amounts for all services, phasing out the “estimated allowed amount” field.

Other changes to the machine-readable files (MRFs) included new data fields, enhanced attestation protocols and requirements to include Type 2 national provider identifiers (NPIs).

Once penalties for noncompliance kick in, they accumulate daily. The amounts vary by bed count and can reach $2 million per year for large facilities.

The announcement is part of the Trump administration’s push to highlight efforts to improve the affordability of healthcare, even as the ranks of the uninsured are increasing after this year’s expiration of the Affordable Care Act (ACA) enhanced subsidies. The healthcare industry also is bracing for a fall-off in Medicaid enrollment when the national work requirement takes effect at the start of 2027.

Transparency legislation in the spotlight

Congress is pushing forward with consideration of legislative language that would make price transparency more robust. The House Energy and Commerce Committee’s Health Subcommittee conducted a June 10 hearing to discuss pending bills.

Among nine bills or preliminary drafts that were on the docket, the Lower Costs, More Transparency Act would make current price transparency regulations the law of the land and expand them to settings such as ambulatory surgical centers (ASCs). Unlike a 2023 version of the bill, which secured passage in the House before stalling in the Senate, the new bill would not require hospitals to replace online estimator tools with a static file for shoppable services.

A preliminary draft of a separate bill would require hospitals to physically post prices on their walls, including cash prices, for shoppable services. Still to be clarified is whether the obligation would apply to a full slate of 300 shoppable services.

Price transparency taken to the next level

Arguably the most ambitious effort is the bicameral Patients Deserve Price Tags Act, which would codify core provisions of current price transparency rules, requiring exact prices instead of estimates. However, it would go several steps further.

For example, patients would be legally protected from owing more than their health plan’s estimator tool calculated for the service. Providers would be prohibited from collecting balances that exceed the calculated amounts. Hospitals also would face a 30-day deadline following a service for supplying the patient with an itemized bill.

Patients Deserve Price Tags and Lower Costs, More Transparency also include transparency provisions affecting insurers, pharmacy benefit managers and other stakeholders.

“When healthcare costs go up, every part of the system seems to blame a different leg of the stool,” Rep. Nick Langworthy (R-N.Y.) said during the subcommittee hearing. “Maybe everyone is right, and maybe they’re all wrong, but the only way to know is for everyone to flip their cards over, because if no one can follow the money, no one can figure out why the costs are skyrocketing to the level they are.”

Transparency as a tool to stem consolidation

A few subcommittee members and invited panelists urged that legislation be advanced to require transparency of hospitals around not only prices, but also ownership. They said a greater understanding of vertical consolidation trends is needed to get a handle on site-based price differentials.

“Most of these transactions are incredibly opaque, which makes it hard for researchers, policymakers and patients to know who employs a given doctor,” said Christopher Whaley, PhD, an associate professor of health policy at the Brown University School of Public Health.

Such a provision also would shine light on private-equity purchases of hospitals.

“What happens in many cases [with] private equity is there is a single transaction that might be too small to be scrutinized regulatorily, and then there’s a second one that adds on top of that, and by and by it essentially adds cumulative market power that leads to higher prices and is passed on to patients at higher out-of-pocket costs,” Whaley said.

With the Medicaid and ACA cuts potentially pushing more hospitals toward private investors, “Congress should at least know who owns what, how these deals are structured and what impact they are having on costs and quality,” said. Rep. Marc Veasy (D-Texas). “That’s why I think transparency is critical. [But] as we consider ways to improve ownership transparency, we should make these reporting requirements pose as little burden as possible to hospitals.”

Stakeholders call for more usable data

Carol Skenes, chief of staff with Turquoise Health, testified at the hearing about why hospital adherence to price transparency rules does not directly translate to actionable data at the policy level.

“Most of them are posting the rates,” Skenes said, “and the challenge then for groups like us is taking that information, which is accurate at that granular level, and then translating that into: What does it mean for an employer who’s looking for care? What does it mean for a patient who’s looking for care?”

Employers would benefit from the Patients Deserve Price Tags Act through provisions giving them long-awaited transparency into claims and encounter data, testified Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions.

“You can see where, just within your own insurance network, which hospitals are priced lower than maybe the ones that you currently have, or that you see most of your patients going to,” Gremminger said. “Then you can direct patients using cost-sharing changes to say, ‘Instead of going to hospital X for your knee replacement, we want to encourage you to go to hospital Y.’”

Dems on board but focusing attention elsewhere

Democrats joined Republicans in voicing support for price transparency, and both Lower Costs, More Transparency and Patients Deserve Price Tags have bipartisan sponsorship. But Democrats generally preferred to emphasize the struggle to keep people insured in the current policy environment.

“Publicly disclosing prices isn’t going to keep safety-net hospitals from shutting their doors because they can’t afford the latest Republican cuts,” said Rep. Raul Ruiz (D-Calif.).

He said with the ongoing and upcoming cuts to the ACA and Medicaid, insurance executives have testified that “the hospitals are going to renegotiate their prices to cover the uncompensated care. [The insurers] are going to pay those prices, and they already have increased premiums for everybody.”

“I’m all for giving regulators more line of sight into healthcare ownership and more tools to protect patients, but we can’t lose sight of the immediate challenge, which is ensuring that hospitals remain financially stable and that patients can afford care in the first place,” said Rep. Lori Trahan (D-Mass.).