The FTC Warns Hospitals That a Price Quote Missing the Physician Fee May Be Deceptive
Letters to 24 of the largest healthcare services companies say meeting CMS price transparency rules is not a safe harbor under federal consumer protection law, especially for scheduled, non-emergency care.
Hospitals that publish the price files CMS requires may assume they have met their price transparency obligations. The Federal Trade Commission says that assumption is wrong.
On Oct. 5, FTC Chairman Andrew N. Ferguson sent letters to 24 of the nation's largest healthcare services companies, reminding them that failing to give patients timely, accurate and complete prices can be an unfair or deceptive practice under Section 5 of the FTC Act. The agency posted a template of the letter and did not name the recipients. At an HHS event the same day, Ferguson said the letters went to the nation's largest for-profit hospital groups, representing more than 1,000 service-provider locations, The National News Desk reported.
A floor, not a safe harbor
The core of the letter is its treatment of the CMS Hospital Price Transparency rule. CMS requirements, it says, establish a critical foundation. "These rules are, however, a regulatory floor: compliance with CMS requirements does not mean that a hospital has met its obligations under Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in the marketplace," Ferguson wrote. "In other words, the CMS rules do not provide a safe harbor from liability under the FTC Act."
The letter singles out non-emergency services scheduled in advance. Because price is a material term, it says, clear and conspicuous disclosures are often necessary, and failing to disclose a price may be deceptive if it is likely to mislead consumers acting reasonably.
A quote that leaves out the physician fee or the facility fee may be deceptive, the FTC says, because patients may reasonably believe it is the total cost of their care.
The physician fee problem
The passage most relevant to physicians concerns incomplete quotes. "And when a disclosure is made, it may still be deceptive if it is incomplete, such as when it omits physician or facility fees or covers only a portion of the expected course of care," the FTC said in its announcement. "This is so because patients may reasonably believe they have been told the total cost of their care."
The FTC also says incomplete, inaccurate or late price information can be unfair. When patients cannot compare competing providers before a scheduled service, and the information was reasonably available to the provider in advance, the agency says the practice offers no countervailing benefit to consumers or competition.
The letter is addressed to companies that operate facilities, but its closing request is broader. It encourages the recipients and all healthcare-service providers in the United States to conduct a comprehensive review of their price-transparency practices and take corrective action swiftly if needed. "The FTC will continue to monitor the healthcare marketplace and take enforcement action as warranted," it reads.
The letter also notes that it does not reflect an individual assessment of any recipient's practices or a conclusion that any recipient violated the FTC Act. Questions go to the Bureau of Consumer Protection's Division of Advertising Practices.
Why now
The letters arrived alongside the administration's final Transparency in Coverage rule for insurers. Ferguson spoke at the HHS announcement. "Consumers have a right to be told of the price of health care in advance before purchasing it, and no hospital is exempt from the principle that every other industry is expected to follow every single day," he said, according to The National News Desk. He said hospitals that do not comply could face FTC enforcement action and litigation.
The letter places the effort within the FTC's broader push on pricing in rental housing, ticketing, grocery delivery and auto sales, and within the Healthcare Task Force Ferguson launched in March. It also cites news reports that CMS has warned more than 500 hospitals that they have not complied with its expanded price transparency requirements.
The American Hospital Association did not comment on the warning letters, Spectrum News reported.
What it means for practices
Hospital-employed physicians and groups that perform scheduled procedures at hospital facilities are part of the price a patient ultimately pays. If the FTC's reading takes hold, an estimate that covers only the facility, or only part of an episode of care, could be a legal risk for the organization that issues it. Practices that coordinate scheduled procedures with a hospital partner may want to know how that partner's estimates account for professional fees, and how their own estimates account for the facility.
Priya Natarajan has run operations for multispecialty groups and writes The Script Pad's practice management column.
This article is for professional education and does not replace clinical judgment. Treatment decisions should be based on the individual patient and current guidelines.
