CMS has accelerated hospital price transparency enforcement

The shift creates enormous opportunities, and legal challenges, for employers and their health benefits advisors.

The history

The acceleration didn't happen overnight.

In February 2025, President Trump signed Executive Order 14221, directing the U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services to implement and enforce transparency within 90 days.

Within that window, CMS found that more than 90% of "estimated allowed amounts" in a sample of large hospital machine-readable files used the placeholder value "999999999."

Nine nines.

The data was meaningless by design.

CMS closed that loophole in May 2025, then finalized the 2026 rule in November. The rule requires hospitals to replace estimates with actual dollar amounts drawn from electronic remittance advice data.

Enforcement activity tells the same story. CMS issued 10 civil monetary penalties against hospitals in 2025, more than doubling the annual pace of the prior administration.

A Health Affairs Forefront analysis found that of 3,764 hospitals reviewed through mid-2025, 65% had received at least one warning notice or corrective action plan request.

Fines in 2025 ranged from $32,301, for a small Louisiana facility, to $309,738, for Arkansas Methodist Medical Center.

The largest fine in the rule's history, $871,122, was issued in 2024 and imposed on =Jackson Memorial Hospital in Miami.

For self-insured employers funding coverage for more than 150 million Americans, these developments matter in three concrete ways: The data is finally actionable, the legal exposure is real, and the waste is quantifiable.

The pricing problems

Start with the data.

The Purchaser Business Group on Health demonstration project, launched in October 2025 with Boeing, Qualcomm, and the city and county of Denver, combined hospital transparency data, Transparency in Coverage files, employer claims, and quality metrics across 10 markets.

PBGH CEO Elizabeth Mitchell summarized the findings this way: When a hospital reports a service at $100 and the insurer paid $200, the $100 gap is where hidden fees and vendor profiteering live.

The numbers support her point.

Turquoise Health's analysis of 500 common services found that self-insured employers can save an average of 27% by comparing carrier rates in the same market.

RAND's Round 5.1 study showed that commercial insurance paid hospitals 254% of Medicare rates on average in 2022, with the gaps in eight states exceeding 300%.

Reference-based pricing strategies built on transparency data have delivered savings of 15% to 30% across multiple documented employer deployments.

The litigation

Now consider the legal exposure.

The Employee Retirement Income Security Act requires employers to act as fiduciaries for the health plans they sponsor.

That means taking a prudent approach to managing plan costs, as well as ensuring that the participants receive adequate benefits.

A near-record 155 ERISA fiduciary class action lawsuits were filed in 2025, with health plans accounting for 35 of them, according to Encore Fiduciary.

In March 2026, a federal judge in the Southern District of New York allowed prohibited transaction claims in Sternv. JPMorgan Chase to proceed past the motion to dismiss.

That was the first time any court had permitted a suit against a self-insured employer over claims of excessive prescription drug costs to survive dismissal on the merits.

One allegation: a 30-unit prescription for the multiple sclerosis drug Teriflunomide was available at retail for $11 to $35 but cost $6,229 when purchased through the plan.

JPMorgan allegedly paid its PBM $3 million annually in administrative fees.

Johnson & Johnson, Wells Fargo, and Mayo Clinic have all faced similar legal actions.

Plaintiffs are now naming brokers and consulting companies, including Willis Towers Watson, Mercer and Lockton, as defendants, right alongside the plan sponsors.

Related: Health, voluntary benefits face surging ERISA litigation

The Consolidated Appropriations Act section 202 fee disclosure requirement sits at the center of these cases.

If a PBM, TPA or broker can't produce documentation for every direct and indirect dollar received in connection with services for a health plan, the contract is a prohibited transaction under ERISA.

The bills

Then there's the waste.

The landmark 2019 JAMA study led by Dr. William Shrank put U.S. healthcare waste at $760 billion to $935 billion annually, or 25% of total spending.

Applied to projected 2025 national health expenditures of $5.6 trillion, that figure now exceeds $1.6 trillion.

Administrative complexity and pricing failure together account for more than half of the total.

Price transparency addresses the pricing failure category directly.

Employers' role

Consumers aren't the primary beneficiaries of this changing landscape, at least not yet.

KFF polling found that only 9% of adults are aware that hospitals must disclose prices. Fewer than 1% of denied insurance claims are appealed.

The practical effect is that plan sponsors carry the responsibility by default.

Employers fund the coverage.

Employers bear the fiduciary duty.

Employers have the legal and economic standing to act on transparency data at scale.

But raw machine-readable files aren't a solution. They're simply the raw material for a solution.

PatientRightsAdvocate.org found in September 2025 that 75% of reviewed hospitals posted pricing algorithms requiring a contract expert to interpret, and 50% posted algorithms that are mathematically unquantifiable.

The Congressional Research Service flagged typographical errors and inconsistent naming patterns that make automated processing "impractical."

Compliance vs. strategy

In my book, "Model Optimal Care: End U.S. Healthcare Waste, One Health Plan at a Time," I describe the difference between transparency as compliance and transparency as strategy.

Compliance posts the file and hopes nobody asks questions.

Strategy combines the file with claims data, quality metrics, and contract terms, then uses the result to rebuild networks, renegotiate contracts, and audit every claim.

Self-insured employers deploying that integrated approach have recorded reductions of 20% to 30% in total health plan costs.

The CMS rule changes of 2025 and 2026 didn't create the opportunity, but they made it impossible to ignore.

The hospital sector knows it. The federal enforcement apparatus knows it. The plaintiffs' bar knows it.

The only question is which plan sponsors act before the next fiduciary lawsuit names their plan.

Jude Odu is the founder of Health Cost IQ and the author of Model Optimal Care: End U.S. Healthcare Waste, One Health Plan at a Time.

He is also the founder of Health Data Intelligence, a company acquired by TrendShift and a former technology executive at the University Hospitals Health System in Cleveland.