House passes package of PBM, price transparency, billing reforms
The House on Monday passed wide-ranging legislation (HR 5378) to require more transparency around pharmacy benefit manager (PBM) business practices, codify and expand Trump-era rules requiring hospitals and insurers to post prices online, and implement site-neutral payment policies in Medicare.
Broad support for the bill from both sides of the aisle (the vote was 320-71) was reinforced by backing from the employer community, including the American Benefits Council, the ERISA Industry Committee, and the Alliance to Fight for Health Care, of which Mercer is a member. Senate lawmakers are working on several similar measures with hopes of passing their own unified bill and negotiating final legislation with the House next year, though the path ahead is unclear. Both chambers are set to recess for the holidays at the end of this week.
New PBM oversight
Starting two years after enactment, the Lower Costs, More Transparency Act would require PBMs to semi-annually (or, at the request of a plan sponsor, not less frequently than quarterly) provide employer-sponsored health plans with detailed data on prescription drug spending, including the acquisition cost of drugs, total out-of-pocket spending, formulary placement rationale, and aggregate rebate information. The bill would also require PBMs and third-party administrators to annually disclose their direct and indirect compensation to plan fiduciaries.
Within three years of enactment, the Government Accountability Office (GAO) would be directed to submit a report to Congress on group health plan, issuer and PBM pharmacy network practices, including the practices of pharmacy networks under common ownership with the group health plans, issuers and PBMs. Within 18 months of enactment, the GAO would be required to report on the role of copay assistance programs, which are common in PBMs, and their effect on insurance, stop-loss coverage, and drug prices.
PBM reforms in public programs would bar spread pricing in Medicaid and require Medicare Advantage (MA) organizations to report to the government information relating to health care providers, PBMs and pharmacies with which they share common ownership. The Medicare Payment Advisory Committee would be required to study and report on vertical integration among MA organizations, health care providers, PBMs, and pharmacies and how that integration affects beneficiary access, cost, quality, and outcomes.
Enhanced price transparency
The bill would generally codify – and thereby strengthen – the Transparency in Coverage rules regarding health insurance price and cost-sharing disclosures to plan participants and beneficiaries. Authorized by the ACA and finalized in 2020, the rules require group health plans to make personalized pricing information available to consumers and to post publicly machine-readable files containing in-network negotiated rates, prescription drug prices, and out-of-network allowed amounts.
The 2019 hospital pricing transparency rules would also be codified. The rules require hospitals that receive Medicare payments to make public all standard charges for all items and services through machine-readable files as well as payer-specific negotiated charges for at least 300 shoppable services. New price transparency requirements would apply to certain imaging services, ambulatory surgical centers, and diagnostic laboratory tests under Medicare. In addition, the bill would enhance enforcement, detail civil penalties for hospital noncompliance with the transparency requirements, and impose significant civil penalties for persistent noncompliance.
The GAO would be directed to report on existing and new health care price transparency requirements, compliance, enforcement, patient utilization, whether requirements can be harmonized to reduce burden and duplication, and the feasibility of adding quality metrics.
Employer access to plan data
The bill would put teeth into the current-law prohibition on “gag clauses” by barring contracts or arrangements between employer plans and any other entity – including PBMs or third-party administrators – from including clauses that restrict a plan from auditing, reviewing or otherwise accessing de-identified claims data. This requirement would mandate an attestation by a plan fiduciary that could not be made by third parties, though it would allow a plan to attach a descriptive response by a third-party. The Labor Department would be authorized to assess a civil penalty of $10,000 per day for violations.
Contracts also could not restrict a plan fiduciary from choosing who will conduct any audits of claims, or limit the number of claims that the plan fiduciary may audit.
Site-neutral payment reforms in Medicare
Medicare would be required to pay off-campus hospital outpatient departments the same for administering drugs as physician offices are paid. Some lawmakers and employer groups argue that physician practices have become an acquisition target for hospitals that charge higher rates for services there by portraying them as provided in a hospital setting. The bill aims to remove the incentive for consolidation by making Medicare payments for physician-administered drugs “site neutral,” meaning that they are the same regardless of where the drug is provided. Stakeholders opposed to the legislation argue that a site-neutral payment policy ignores the overall hospital cost structure and that off-campus provider-based hospital outpatient departments are not equivalent to physician offices. The bill would also require each off-campus hospital outpatient department to use a unique billing code for that facility in order to bill Medicare.
Employer groups strongly support these provisions but are urging Congress to further expand site-neutral policies as the legislative process moves forward.