Biden administration seeks higher penalties for hospitals that don’t publish prices

The Biden administration is proposing to increase the penalty for hospitals that don’t comply with a federal rule requiring them to publicly post the prices of their procedures. 

A proposal released Monday by the Centers for Medicare and Medicaid Services would raise the maximum penalty to $2 million a year for large hospitals that don’t post online the secret prices they have negotiated with insurance companies for 300 common services and procedures that can be planned in advance. 

The proposal represents a sharp increase from the current maximum penalty of only $109,500 a year for large hospitals, which are those with more than 30 beds. 

The rule, which was written by the Trump administration and published in 2019, was praised for its attempt to shine a light on the opaque world of hospital pricing. 

Hospitals can charge vastly different amounts for the same service. Even in the same hospital, the rates can differ greatly depending on whether the patient is covered by Medicare, Medicaid or private insurance. That variation can make it nearly impossible for patients to shop for the best deal or for employers to negotiate competitive rates.

But advocates criticized the Trump-era effort for not having enough teeth behind it because the penalties were so low. They hope the new proposal could have a bigger impact on driving down costs. 

The hospital industry has spent years fighting price transparency efforts and sued to block the rules.

The rules took effect Jan. 1, but a report from a patient advocacy group found very few hospitals were actually following them. Last week, President Biden issued an executive order instructing the Department of Health and Human Services (HHS) to support enforcement of the rules.

“No medical entity should be able to throttle competition at the expense of patients,” HHS Secretary Xavier Becerra said in a statement. “With today’s proposed rule, we are simply showing hospitals through stiffer penalties: concealing the costs of services and procedures will not be tolerated by this Administration.”