Kell West Regional Hospital, DAB CR6418 (2024)

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to impose civil monetary penalties against Respondent, Kell West Regional Hospital, of $410 for each day of a period that began on July 8, 2022, and that continued through April 19, 2023. 

I. Background

CMS alleges that Respondent failed to comply with regulations at 45 C.F.R. Part 180, (the “Hospital Price Transparency regulations”), because it failed to make public an accurate and complete list of its standard charges for items and services that it provided.  CMS notified Respondent of its intent to impose civil monetary penalties against it and Respondent requested an administrative hearing.  I hear and decide this case pursuant to regulations that are published at 45 C.F.R. § 150.401 et seq., and 45 C.F.R. § 150.317 (incorporated by reference into 45 C.F.R. § 150.417(b)(1)). 

CMS filed a brief and proposed exhibits, identified as CMS Ex. 1 – CMS Ex. 23.  Respondent filed an opening brief and a reply to CMS’s brief as well as a single exhibit

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that it identified as P. Ex. 1.¹  Neither CMS nor Respondent objected to my receiving any exhibits into evidence.  I receive CMS Ex. 1 – CMS Ex. 23 and P. Ex. 1 into evidence. 

I find it appropriate that I decide this case based on the parties’ written exchanges and without convening an in-person hearing.  45 C.F.R. § 150.419.  None of the parties’ exhibits contain the testimony of a witness and neither party requested to have a witness testify on its behalf. 

II. Issues, Findings of Fact and Conclusions of Law

1. Issues

 The issues are whether Respondent failed to comply with the requirements of 45 C.F.R. Part 180, and whether CMS’s remedy determination is reasonable. 

2. Findings of Fact and Conclusions of Law

CMS has the burden of coming forward with evidence to establish that Respondent failed to comply with regulatory requirements.  It has the ultimate burden of proving by a preponderance of the evidence that noncompliance occurred and that its remedy determination is reasonable.  45 C.F.R. § 150.443(a)(3).  Respondent has the burden of offering evidence that supports its affirmative defenses.  45 C.F.R. § 150.443(a)(4). 

I have evaluated the evidence considering the parties’ respective burdens.  I find that CMS offered proof to establish that Respondent failed to comply with regulatory requirements throughout the period for which CMS imposed civil monetary penalties.  I find also that evidence offered by CMS establishes the penalty amount and duration to be reasonable. 

Respondent failed to offer proof to establish any of the affirmative defenses that it makes.  Some of Respondent’s arguments also fail as a matter of law. 

1. Noncompliance

The Hospital Price Transparency regulations establish specific requirements with which each hospital operating within the United States must comply.²  A hospital must establish, update, and make public a list of all its standard charges for all items and services.  That

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list must be posted online in a form that the regulations specify.  45 C.F.R. § 180.50(a)(1).  The hospital’s list of charges must contain certain specific data elements.  45 C.F.R. § 180.50(b)(1)–(7).  The hospital must make public the standard charges for the 70 “shoppable services” that CMS specifies and for any additional shoppable services supplied by the hospital for a combined total of at least 300 of these services.  45 C.F.R. § 180.60(a)(1).³  Each charge that the hospital posts must contain data as specified at 45 C.F.R. § 180.60(b). 

CMS reviewed Respondent’s website⁴ multiple times beginning in May 2022.  Each review established that Respondent failed to post its standard charges for certain items or services consistent with the requirements of the Hospital Price Transparency regulations. 

CMS conducted initial reviews from May 23, 2022, through June 16, 2022, and from June 22, 2022, through July 8, 2022.  CMS Ex. 3 at 1; CMS Ex. 4 at 1.  The June 22, 2022, through July 8, 2022 review found that Respondent had committed ten regulatory violations including six violations of 45 C.F.R. § 180.50(b), (d), and (e) and four violations of 45 C.F.R. § 180.60(a), (b), and (e).  CMS Ex. 5 at 1-3. 

CMS conducted a warning notice review from October 26, 2022, through November 3, 2022.  CMS Ex. 6 at 1.  CMS found that Respondent had corrected some of the violations that had been revealed at the initial review of Respondent’s hospital charges.  But it also found that Respondent continued to violate 45 C.F.R. §§ 180.50(b) and 180.60(b) because Respondent had not corrected all of the violations found in the initial review of its website.  CMS also determined that Respondent manifested several new regulatory violations of 45 C.F.R. §§ 180.50(c) and 180.60(c).  Id. at 1-10; CMS Ex. 8. 

CMS conducted a corrective action plan re-review, beginning in March 2023, through April 10, 2023.  CMS Ex. 14 at 1, 3-6; CMS Ex. 15 at 1, 28, 31.  CMS found additional violations during this review.  CMS Ex. 14; CMS Ex. 15. 

CMS made efforts to induce Respondent to correct its violations.  On July 27, 2022, it sent Respondent a warning notice listing the findings from the initial review of Respondent’s website.  CMS Ex. 5 at 1-3.  CMS gave Respondent 90 days to correct its regulatory violations.  Id. at 3. 

CMS did not commence its warning notice review of Respondent’s website until after the 90-day period had elapsed.  After the warning notice review – at which, as I have stated, CMS found both uncorrected and additional violations – CMS sent a notice to

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Respondent, dated November 7, 2022, requesting that Respondent submit a corrective action plan within 45 days.  CMS Ex. 8 at 1, 3, 5.  Respondent submitted a corrective action plan to CMS on December 22, 2022.  See CMS Ex. 16 at 3; CMS Ex. 10 at 2.  CMS requested a corrective action plan revision.  CMS Ex. 11.  Respondent submitted a revised corrective action plan to CMS on January 19, 2023, projecting that it would rectify its noncompliance by February 15, 2023.  CMS Ex. 12.  On January 25, 2023, CMS approved Respondent’s revised corrective action plan.  CMS Ex. 16 at 3; CMS Ex. 13.  However, and as I have stated above, CMS found additional violations when it conducted its third review in March 2023. 

The July 27, 2022 notice that CMS sent to Respondent after the initial review advised Respondent that CMS could impose civil monetary penalties against it if it did not correct its violations within 90 days from the date of the notice, or by October‎ ‎25‎, ‎2022.  See CMS Ex. 5 at 1.  CMS, in fact, gave Respondent far more time to correct its violations.  It did not impose penalties against Respondent until April 19, 2023, after twice having given Respondent the opportunity to make corrections.  CMS Ex. 16. 

CMS supported its allegations of regulatory violations by providing documentation of the multiple reviews it conducted of Respondent’s website.  These include reviewers’ notes and screen shots of the website.  CMS Ex. 1 – CMS Ex. 4; CMS Ex. 6; CMS Ex. 7; CMS Ex. 14; CMS Ex. 15.  The documentation is prima facie proof of Respondent’s violations.  I find that it is sufficient to meet CMS’s burden of establishing Respondent’s noncompliance with the Hospital Price Transparency regulations. 

Respondent has not offered any evidence to show that CMS’s findings of violations are incorrect.  It has not challenged any of the specific violations that CMS found.  Nor has it offered evidence from its website (i.e., screen shots) showing that the charges listed for the services that it provided conformed with regulatory requirements. 

Respondent argues that it maintains the information presented on its official website with the “utmost diligence and responsibility.”  Respondent’s brief at 1.  It asserts that its efforts are consistent with prevailing regulations and guidelines.  Id.  That may be so at the present moment, but it begs the question of Respondent’s compliance between July 8, 2022, and April 19, 2023.  This case is not about Respondent’s current compliance with regulatory requirements.  This case is about Respondent’s compliance throughout the period when CMS reviewed Respondent’s pricing information and requested corrective action from Respondent. 

According to Respondent, the information that is “currently available” on its website “mirrors the content present at the time of the penalty assessment, save for intermittent display anomalies attributable to our web hosting provider.”  Respondent’s reply brief at 1.  Respondent offers no evidence to substantiate this claim.  However, even if this claim

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is true, Respondent acknowledges that there were errors on its website at the time of the penalty assessment.  Id. 

Respondent contends that from the inception of the Hospital Price Transparency regulations it has consistently made available on its website “the information that pertains to these guidelines.”  Respondent’s brief at 2.  According to Respondent, the information that it has supplied has been curated, drawing on the data that Respondent receives from insurers.  Respondent asserts that its website delineated the costs applicable to patients who are uninsured or who seek to pay in cash for the services that they receive.  Id. 

These assertions seem to be intended to refute CMS’s findings that Respondent did not post the charges for the items and services it supplied in accord with the regulatory requirements.  However, Respondent offered no evidence to refute CMS’s noncompliance findings.  If, for example, Respondent contends that its website listed the charges for the shoppable services that it provided, then it would be Respondent’s burden to offer evidence showing that is the case.  That evidence might consist of screen shots of Respondent’s website or other documents.  However, Respondent offered no such evidence. 

Moreover, Respondent’s assertion that it complied with regulatory requirements contradicts admissions to the contrary that it made in its request for a hearing and elsewhere.  Respondent admitted in several of its submissions that it had not complied with the requirements of the Hospital Price Transparency regulations.  E.g., CMS Ex. 17 at 8.  In its hearing request Respondent conceded that there were disparities in the manner that it displayed information on its web site.  These admitted disparities, Respondent contends, were the fault of the website’s hosting company.  Respondent’s request for hearing at 1.  Respondent acknowledged additionally in its hearing request that:  “we have encountered persistent issues that have proven elusive to remediation.”  Id.  In its reply brief Respondent concedes that a need existed for it to make adjustments and to add missing information to its website.  Respondent’s reply brief at 2. 

Additionally, Respondent avers that its website conformed with all regulatory requirements as of October 25, 2022.  Respondent’s brief at 3.  Respondent offered no evidence from its website to support this assertion.  Respondent contends that its website was endorsed by the Texas Department of Health and Human Services, an agency of state government.  That endorsement, according to Respondent, is “corroborative evidence, validating our alignment with the stipulated format and data parameters, thereby evidencing our compliance.”  Id.; see P. Ex. 1 at 2. 

The compliance discussion that Respondent had with Texas officials did not address Respondent’s compliance with the Hospital Price Transparency regulations.  Rather, that discussion – and the correspondence memorializing it – addressed Respondent’s compliance with state requirements.  P. Ex. 1 at 2.  Whatever may have been resolved

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between Respondent and the state officials provides no defense for Respondent’s noncompliance with the Hospital Price Transparency regulations. 

This case is one of first impression.  I am aware of no decision prior to this one that addresses the application of the Hospital Price Transparency regulations.  However, the Departmental Appeals Board on more than one occasion has addressed the question of whether a state agency’s finding of regulatory compliance serves as a defense to CMS’s finding of noncompliance.  The answer to that question is no – CMS’s interpretation of regulations and evaluation of a supplier or provider’s compliance with those regulations always takes precedence over the interpretation or evaluation made by a state agency.  A Samuel’s Christian Home Care, DAB No. 3043 at 5 (2021).  Furthermore, a state agency’s certification that a provider or supplier complied with state regulations does not suffice to prove that the provider or supplier complied with federal regulations.  Community Hospital of Long Beach, DAB No. 1938 at 12 (2004). 

Respondent’s assertion that it attained compliance with federal regulatory requirements by October 25, 2022, contradicts admissions in its brief that it failed to do so.  Respondent’s brief at 3-4.  It acknowledges that after that date:  “[f]urther communication from CMS made us realize intermittent inconsistencies in the website display each time its respective link was accessed.”  Id. at 3.

2. Remedy

CMS may impose a civil monetary penalty against a hospital that is noncompliant with the Hospital Price Transparency regulations and that fails to comply with the requirements of a corrective action plan.  45 C.F.R. § 180.90(a).  The effective date for noncompliance – the start date for a civil monetary penalty – is the latest of the following dates:  the first day that the hospital is required to meet the Hospital Price Transparency regulations’ requirements; the date 12 months after the date of the hospital’s last annual update of its charges; or, a date determined by CMS, such as one resulting from monitoring activities or a hospital’s development of a corrective action plan.  45 C.F.R. § 180.90(b)(2)(ii)(A)-(C). 

CMS determined a July 8, 2022, start date for the imposition of a civil monetary penalty against Respondent.  That date is the date when CMS completed its first review of Respondent’s website.  I find it to be authorized by 45 C.F.R. § 180.90(b)(2)(ii)(C).  CMS determined the end date of the penalty to be April 19, 2023. 

CMS may impose a civil monetary penalty against a noncompliant hospital of as much as $10 per‑bed per‑day for a hospital having at least 31 beds up to a maximum of 550 beds.  45 C.F.R. § 180.90(c)(2)(ii)(B).  There is no dispute that Respondent has 41 beds.  CMS determined to impose a daily penalty of $410 against Respondent (41 beds x $10 per‑bed

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per-day).  That amount is the maximum daily penalty amount authorized by the regulation. 

The Hospital Price Transparency regulations do not state criteria for determining the reasonableness of a civil monetary penalty amount.  The language authorizing a penalty of up to $10 per‑bed per‑day states that amount as a maximum, suggesting that CMS has discretion to impose a lower penalty amount per‑bed if it elects to do so. 

The regulations governing hearings, including hearings involving imposition of penalties pursuant to the Hospital Price Transparency regulations, direct an administrative law judge to decide whether a penalty amount is reasonable.  45 C.F.R. § 150.417(a)(2).  The hearing regulations instruct the administrative law judge to assess the reasonableness of a penalty amount by considering the factors governing penalty amounts at 45 C.F.R. § 150.317.  These factors include a hospital’s prior compliance history and the gravity of its noncompliance.  45 C.F.R. § 150.317(a), (b). 

There is no evidence addressing Respondent’s compliance history.  As to the gravity of Respondent’s noncompliance, the evidence establishes it to have been serious.  I find that the seriousness of the noncompliance is ample reason to sustain CMS’s determination of a penalty amount of $10 per‑bed per‑day. 

Respondent’s failure to provide its shoppable charges in a user-friendly format on its website frustrated the purpose of the Hospital Price Transparency regulations.  The evidence establishes that Respondent remained noncompliant with the Hospital Price Transparency regulations for a period of more than eight months, a very substantial period.  It remained noncompliant notwithstanding persistent efforts by CMS to induce Respondent to comply.  The noncompliance was not trivial.  To the contrary, failure to post accurate charges for shoppable items or services meant that individuals seeking care from Respondent could have been left in the dark about the expenses that they would incur. 

Respondent argues that its failure to comply with regulatory requirements amounted to unintentional and purely clerical errors.  Respondent’s brief at 4.  It contends that any regulatory violations on its part were unintentional.  Id.

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I do not find that Respondent intentionally violated the Hospital Price Transparency regulations.  However, the absence of intentional noncompliance is no justification for me to reduce the civil monetary penalty that CMS imposed.  Respondent may not have willfully violated the regulations, but it saw no urgency in correcting the violations that were present.  Respondent was on notice from CMS beginning in July 2022 that it was noncompliant.  It failed to implement all necessary corrections over a period of more than eight months despite repeated requests from CMS that it do so.  And, even as it corrected some noncompliance, additional noncompliance transpired.

Endnotes

¹  At different places in the record, Kell West Regional Hospital is identified as “Respondent” or “Petitioner.”  For the purposes of this decision, I refer to Kell West Regional Hospital as Respondent.

²  There is no dispute that Respondent is a “hospital” as is defined by 45 C.F.R. § 180.20.

³  A “shoppable service” is a service that can be scheduled in advance by a healthcare consumer.  45 C.F.R. § 180.20.

⁴  Available at https://www.kellwest.com/ (last visited Dec. 27, 2023).