Medical Price Transparency Marches On, Part II: Risks and Opportunities with Comprehensive Good Faith Estimate Compliance

Jan. 1, 2023, is the current enforcement date under the federal No Surprises Act for provider groups to work collaboratively on furnishing comprehensive Good Faith Estimates that include estimates from multiple providers for a single health care interaction. The requirement carries potential revenue cycle and liability risk for provider groups that, to date, may not have been previously legally required to jointly develop comprehensive estimates for patients. While the American Hospital Association has lobbied the Centers for Medicare & Medicaid Services to remove duplication in federal price transparency laws and to extend the comprehensive GFE enforcement deadline, providers of all types should prepare themselves for an increased public focus on prices in the health care marketplace as data becomes readily accessible. The introduction of federal regulatory mandates into the medical field may spark new avenues for legal challenges to existing revenue cycle practices. Engaging with co-provider stakeholders to comply as efficiently as possible with the GFE requirements is necessary to minimize these risks in a shifting compliance landscape.

Pre-NSA Price Transparency Enforcement

Prior to 2020, according to a Pioneer Institute survey study, very few states had true price transparency laws. Only a handful of states had regulations that required provision of personalized cost information for scheduled medical services. Other states had begun to develop rough online price estimate tools, but most states had no laws requiring individualized pricing information. So what form of price transparency enforcement existed if laws governing pricing data were so sparse? The partial answer is litigation contesting medical billing practices.

Prior to the NSA, a search for class action suits involving hospitals and other providers yields roughly a thousand cases around the country raising provider billing claims. Common theories of relief asserted include breach of contract and implied covenants of good faith, breach of fiduciary duty, and unfair and deceptive trade practices. These would arise from plaintiffs contesting adequate disclosure or definitiveness of the price term, or some plaintiffs would frame the violation as arbitrary pricing schemes across different payer groups. Facility fees, operating room access fees and co-provider charges are often the focus of these disputes.

While the strength of legal theories behind the fiduciary duty and unfair and deceptive trade practice claims are not particularly strong, the scrutiny of billing practices has increased the frequency of these theories being asserted. Even as pricing data becomes more widely accessible, consumers may not automatically gain detailed insight into the legitimate reasons why prices vary by provider and across payer groups. This disconnect alone can fuel further litigation pressures.

GFE-Associated Risk to Providers

While there was some risk to providers for their relevant billing practices prior to the NSA, the emergence of federal price transparency laws, and the GFE requirement in particular, introduces new challenges. First, the dispute resolution process can be triggered if the total billed charges for an individual provider are $400 greater than the estimate for that provider’s services. This could pose frequent revenue cycle disruption, as even slight changes in medically necessary but complex procedures can trigger charge disputes. This could be especially problematic for co-providers who do not control the final estimate delivered to the patient, or if convening providers are providing charge ranges that may or may not accurately reflect the co-providers’ expectations for billed charges. This also creates the potential for provider-to-provider disputes, as co-provider collectable amounts are affected by the execution of the separate convening provider.

Second, the statutory entanglement of multiple providers in creating the GFE could be seen to create complex fiduciary duty relationships between both providers and the patient. While states may differ on whether or not fiduciary duties are recognized in these relationships, providers should expect patients to take notice of the increased pricing data presented to them. In a similar manner to pre-NSA challenges to billing practices, failure to successfully comply with the GFE requirements may birth new theories for attempted class action litigation. Even diligent compliance could highlight variability in pricing in a manner that might spur unfair and deceptive trade practice claims, with price transparency becoming an increasing public interest focus.

Third, the GFE is not the only transparency-adjacent provision of the NSA that could lead to civil monetary penalty enforcement for deficiencies. The NSA also contains certain disclosure and notice requirements, on top of already-existing state-mandated disclosures. Providers are required to make patients aware of the requirements and prohibitions imposed by the NSA and must inform the patient of means available to report any violations. Inadequacies in these additional notice and disclosure practices could fuel stronger enforcement actions by federal and state regulators alike.

Future Enforcement and Risk Mitigation

It is still unclear to what extent the presence of federal requirements and complaint procedures will preempt certain legal claims for NSA-adjacent violations. It is also unclear whether areas of state law, such as unfair and deceptive trade practices, will import NSA requirements. Enforcement of the NSA will be shared with the states based on whether the individual state has a similarly comprehensive law in relation to a given provision of the NSA. Provider-side enforcement could still heavily be driven by state government agencies but capacity will vary state by state. Class action and civil monetary penalty risk could primarily be driven by wholesale failures to comply with the NSA’s GFE and notice requirements, while unfair and deceptive trade practice claims could simply be fueled by the increased public transparency necessitated by the law.

Providers who have not yet achieved compliance with existing GFE or notice provisions should work closely with counsel to navigate. Existing notice and consent forms should be scrutinized by counsel for consistency with the terms provided in the newly required GFEs and NSA-related disclosures. Further, some providers are embracing this landscape as an opportunity to develop technical and practical capabilities to share individualized cost information across platforms. This likely requires updates to existing contractual relationships and data-sharing agreements.

Conclusion

Federal price transparency laws, including the GFE and notice-related provisions of the NSA, add new dimensions to the enforcement risks facing providers. While civil monetary penalty enforcement may still be further out on the horizon, the implementation of these regulations likely only shifts the way plaintiffs may approach their contesting of medical billing practices. Providers should monitor this space for future updates as CMS is expected to release final rules for the Act in the near future. The Robinson Bradshaw Health Care and Regulated Professions Practice Groups can help advise on this evolving compliance focus, including providing strategic counsel to national providers on the various and evolving federal and state legal requirements. We have experience with proactive measures (ranging from patient intake and disclosure review to contractual addendums) to anticipate and mitigate these important risk management and reputational considerations.

This article was prepared with the assistance of Samuel Gerstemeier, a rising 3L student at the University of Virginia School of Law.