Provision of Hospital Price Information After Increases in Financial Penalties for Failure to Comply With a US Federal Hospital Price Transparency Rule

Abstract

Importance: Price transparency regulations aim to help patients make informed decisions about medical care, but enforcing these rules is a policy challenge. There may be an association between financial penalties and hospital compliance for enforcing price transparency regulations. Objective: To evaluate the association between financial penalties and acute care hospital compliance with the 2021 Centers for Medicare & Medicaid Services (CMS) Price Transparency Rule. Design, Setting, and Participants: This cohort study uses an instrumental variable design to evaluate the responses of 4377 acute care hospitals in the US operating in 2021 and 2022 to changes in financial penalties in the context of a federal rule requiring hospitals to disclose privately negotiated prices. Exposure: Changes in noncompliance penalties between 2021 and 2022 based on a nonlinear function of bed counts. Main Outcomes and Measures: Whether hospitals publicly posted a machine-readable file with private, payer-specific negotiated prices at the service-code level. Negative controls were used to address confounding. Results: The final sample included 4377 hospitals. Compliance increased from 70.4% (n = 3082) in 2021 to 87.7% (n = 3841) in 2022, with 90.2% of hospitals (n = 3948) reporting prices in at least 1 year. Noncompliance penalties increased from $109500/y in 2021 to a mean (SD) of $510976 ($534149)/y in 2022. Penalties in 2022 were substantial, averaging 0.49% of total hospital revenue, 0.53% of total hospital costs, and 1.3% of total employee wages. Compliance increases were significantly positively correlated with penalty increases: a $500000 increase in penalty was associated with a 2.9-percentage point (95% CI, 1.7-4.2 percentage points; P