FTC expands healthcare price transparency enforcement as HHS updates rules

Notable government actions on healthcare price transparency have taken place this week, with the Federal Trade Commission (FTC) opening a new front in enforcement of hospital price transparency and HHS updating regulations for health plans.

Although hospital price transparency enforcement has primarily fallen under the purview of CMS, the FTC says breaches of transparency requirements may violate consumer protections under the FTC Act. Patients have a right to clear, accurate and complete pricing information before they receive nonemergency care, according to Oct. 5 letters sent to 24 health systems.

The commission frames the letters as a warning rather than an accusation, with no allegations that the recipient hospitals have violated the law. Instead, the letters call on recipients to review their price transparency practices.

“The FTC will continue to monitor the healthcare marketplace and take enforcement action as warranted,” the letters state.

Price transparency thus could move beyond healthcare compliance and into the realm of consumer protection oversight.

FTC says CMS compliance may not satisfy consumer protection law

Although regulations drafted by CMS heading into 2021 and modified several times since establish a baseline for hospital transparency, the FTC says providers may need to go further under Section 5 of the FTC Act.

That section “prohibits unfair or deceptive acts or practices in the marketplace,” according to the letter. “In other words, the CMS rules do not provide a safe harbor from liability under the FTC Act.”

Hospitals should provide patients with timely pricing information, especially before scheduled services, per the letter. The information should reflect actual expected costs and should be comprehensive (e.g., including facility fees or physician fees). The disclosures should not be hidden in fine print.

“Under Section 5, the price of healthcare services is a material term,” the letter continues. “This means that clear and conspicuous disclosures are often necessary to prevent consumers from being deceived.”

FTC action adds another layer of price transparency enforcement

While the FTC traditionally is classified as an independent agency within the executive branch, an Oct. 5 commission statement referred to the “Trump FTC’s ongoing commitment to promote healthcare affordability and price transparency for consumers,” thus putting the correspondence in the context of broader administration policy.

The FTC says the letters reflect ongoing concern as healthcare costs are among many consumers’ largest expenses, and prices for the same service can vary significantly between hospitals.

Enforcement actions against any entity that the FTC finds to have engaged in deceptive business practices may include injunctive relief, such as a court order to publish clearer pricing information. Financial liability and public exposure also are possible outcomes.

Health plan transparency rules overhaul machine-readable files

On health plan price transparency, HHS and the Departments of Labor and Treasury issued revamped regulations. A Transparency in Coverage final rule published Oct. 6 states that regulations issued in 2020 and implemented in 2022 fell short because of unwieldy machine-readable files (MRFs) and misalignment with hospital price transparency data.

Many of the new rule’s core changes to MRFs take effect five months after publication of the rule (i.e., on or around March 6), according to a fact sheet.

“To reduce duplicative data, the Departments finalized a change to the level at which group health plans and health insurance issuers must report data in the In-network Rate File,” the fact sheet states. “Under this provision, plans and issuers must prepare one In-network Rate File for each provider network they maintain or contract with, rather than for each plan or policy they offer, as required by the 2020 final rules.”

Taking price transparency reporting from the individual-plan level to the provider-network level can streamline MRFs and help the files better align with hospital price transparency files, according to the fact sheet: “Aligning payer and hospital data reporting will help normalize data across different systems, improve consistency, and make comparisons between the payer and hospital machine-readable files easier for file users.”

To ease administrative burden, the new regulations are reducing required MRF updates and postings from monthly to quarterly.

Out-of-network price data will become more detailed

Out-of-network data also is being enhanced in the MRF under provisions of the final rule, including by requiring allowed amounts to be segmented into large-group, small-group, individually insured and self-insured categories. The rule also drops the threshold for listing the amounts from 20 claims to 11 per service.

“Providing this data at the market-type level will allow users to compare allowed amounts for plans within the same [insurance] market, which, based on feedback, the Departments anticipate will better position researchers and academics to conduct analyses to inform the public,” the fact sheet states.

Prescription drug transparency requirements are next

One of the biggest pending developments in health plan transparency is the addition of a Prescription Drug File to MRFs. In the new rule, the federal departments said they intend to begin development of a schema in November and finalize it in May 2027. Health plan posting of drug prices will be required starting in December 2027.

“Upfront out-of-pocket estimates aren’t just possible for a single visit or shoppable service, they’ll now be possible for a patient’s entire episode of care, pharmacy counter included,” transparency experts with Turquoise Health wrote in an analysis.

“When prices for hospital charges, non-hospital charges and drug charges are all available in organized, defined machine-readable files, the foundation to facilitate an accurate, comprehensive patient transaction is infinitely more stable,” the analysis continues.