The American Hospital Association (AHA) has formally asked the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) to halt a proposed information blocking rule that would impose steep financial penalties on hospitals that restrict electronic health data sharing.
Hospital groups warn of severe financial impact
In a January 2 letter addressed to CMS Administrator Chiquita Brooks‑LaSure and ONC’s Mikey Tripathi, the association argued that the rule’s “disincentive structure” is “excessive” and could threaten the financial viability of “economically fragile hospitals, including many small and rural hospitals.” The letter, signed by senior vice president of public policy Ashley Thompson, urged the agencies to verify their calculations and publish the exact formula used to determine penalties.
Under the proposal, providers found to have blocked information sharing would face reduced reimbursement under Traditional Medicare. For hospitals paid under the inpatient prospective payment system (IPPS), CMS would cut the market basket update by 75 percent. Critical access hospitals (CAHs) would see a one‑percentage‑point reduction in reimbursement.
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The AHA contends that CMS and ONC underestimated the effect of a 75 percent decrease in yearly market basket updates for IPPS hospitals and a 1 percent cut for CAHs. The agencies reference a hypothetical 3.2 percent market basket increase, then propose taking three‑quarters of that increase away if the disincentive applies.
Several members have run their own numbers and found potential penalties could be more than three times the upper‑level estimate published in the rule. “For critical access hospitals, a 1 percent cut in payment would be very challenging,” the letter notes, especially as sequestration already pushes CAH payments below cost and Medicare Advantage plans often reimburse at lower rates.
Procedural concerns and calls for stability
The association also flagged uncertainty around the Office of the Inspector General’s process for determining information blocking, including an unclear appeals pathway. Because disincentives are tied to variable payment components such as market basket adjustments and performance incentives, they warned that “it would create an unfair and confusing framework” where punishment could vary widely depending on the year of the violation.
“Such instability in program rules has created substantial burden and confusion for providers, detracting from one of the program’s key goals: to use information technology to improve patient outcomes by easing access to electronic health information,” the letter said. The proposed rule would be the fourth update since 2019, a frequency the group believes adds to provider fatigue.
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Calls for separate handling of ACO penalties
The AHA recommended that any disincentives related to accountable care organizations (ACOs) be addressed in a distinct rule, after the risks are better understood. “We also strongly suggest developing any ACO‑specific penalties in close consultation with those administering an ACO to ensure the agencies understand the impact of any proposed penalties,” the letter stated.
Other industry groups, including the National Association of ACOs (NAACOS), have voiced similar concerns and asked CMS and ONC to reconsider aspects of the information blocking rules.
With nearly 5,000 member hospitals and health systems and more than 270,000 affiliated physicians, the association’s opposition represents a sizable stakeholder base. The letter emphasizes that any final rule should be transparent, financially realistic, and crafted with input from the providers it will affect.