The federal government fined two hospitals in Georgia for failing to provide consumers with online prices for medical services, a move that comes over a year after federal law began requiring hospitals to be fully transparent about costs.

Northside Hospital Atlanta and Northside Hospital Cherokee were fined a collective total of over $1 million on June 7 by the U.S. Centers for Medicare and Medicaid Services, a federal agency that investigates noncompliance with price transparency law. CMS charged both medical facilities with not following “requirements for hospitals to make standard charges public.” 

Leading up to the fines, the hospitals received at least three warnings from CMS. Since they did not respond or take steps to resolve the problem, the hospitals received the first fines ever issued by CMS for a lack of price transparency.

The Hospital Price Transparency Law

According to the documents outlining the charges, the two hospitals are in violation of the Hospital Price Transparency Law. The Department of Health and Human Services, Department of Labor and Department of the Treasury released this federal regulation during the Trump Administration. The law went into effect on January 1, 2021. 

Hospitals must include their standard charges on a public website under the Hospital Price Transparency Law, including a display of the costs for 300 shoppable services that patients can schedule in advance. This gives consumers the ability to check prices before undergoing medical procedures and avoid surprise fees afterwards.

CMS started auditing hospitals as soon as the law became binding, looking at random facilities in addition to addressing specific complaints. Before hitting liable hospitals with hefty fines for not being straightforward about pricing, CMS first sends written warnings. Hospitals that do not act within 90 days incur fees that include up to $300 per day of noncompliance. Critics have reasonably pointed out that $300 per day is a very low penalty—perhaps too low to be effective—considering the size of the typical hospital budget.

Nationwide Noncompliance

The two recently fined hospitals are a reminder of a broader trend of hospitals nationwide falling short of giving consumers full access to medical costs. In a February 2022 semi-annual report, Patient Rights Advocate found that only 14.3% of 1,000 analyzed hospitals were complying with the transparency rule. The low rate of compliance is affirmed by the findings of a recent study published in the Journal of the American Medical Association, which reported that less than 6% of 5,000 reviewed hospitals were fully compliant. 

With an evident lack of price transparency, it’s no surprise that an estimated 44% of Americans are avoiding healthcare services because they are uncertain about costs. Proper enforcement of the Health Transparency Law ensures that customers gain knowledge about prices needed to make informed healthcare decisions.

More Change Coming

While the federal government is only now beginning to enforce the hospital price transparency rule that went into effect nearly 18 months ago, more change is on the horizon: A corresponding “Transparency in Coverage” rule will apply price transparency requirements to health insurance companies, effective July 1, 2022. 

The new policy will require group health plans and health insurance issuers to participate in a three-stage plan to disclose costs for services. The first stage involves making accessible files with both in-network prices and permissible out-of-network charges. The second and third stages aim at establishing a digital tool for consumers to view estimates of how much they are responsible for particular goods and services.

Ultimately, if the government is successful at requiring price transparency in health care and health insurance, Americans could greatly benefit. Not only could we better plan for health expenses, but health providers would be forced to compete when it comes to value. Competition is the key to controlling healthcare costs, which have long been increasing to ever more unaffordable levels. These rules represent hopeful developments, if regulators can truly hold hospitals and insurers accountable.