After months of failing to move draft bills forward, Senate HELP Chairman Lamar Alexander (R-TN), House Energy and Commerce Chairman Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR) recently announced that they have reached a bipartisan agreement on legislation to lower health care costs. This revised bill is based on the Lower Health Care Costs Act introduced in the Senate HELP committee this past summer. Reports indicate that legislators hope to attach this health care package as a rider to a government funding deal that must be passed by December 20th.
This revised legislation is broken into six areas of focus:
- Improving public health
- Improving transparency in health arena
- Preventing surprise medical bills
- Improving competition to lower drug costs
- Updating tobacco product regulation
- Improving the exchange of health information
While each section has different provisions aimed at lowering health care costs, I want to call attention to measures in the second and third titles. The second title includes a provision related to increased oversight of pharmacy benefit managers (PBMs). As written, this bill would ban spread pricing and require PBMs to pass all rebates or discounts to the plan sponsor. The latter proposal is interesting because a July 2019 Government Accountability Office (GAO) report indicated that in 2016, PBMs passed almost all of their Part D rebates to plan sponsors. More specifically, the report states that “PBMs retained less than 1 percent of rebates.” Nonetheless, the inclusion of this language isn’t surprising considering the increased attention PBMs have been getting for their role in drug spending.
The third title of this bill entitled the No Surprises Act has by far received the most media attention. You may recall that both chambers released surprise billing legislation in the summer but there was disagreement on what method should be used to stop the practice. In short, insurers prefer using a benchmark rate based on in-network providers in the surrounding geographic area while providers prefer using arbitration in which an independent entity decides what the payment rate should be.
The old House bill included the option for arbitration, but the old Senate bill solely relied on the benchmark rate. Under the new compromise lawmakers announced, bills that exceed $750 will go to an arbitration process while anything under this threshold would use the benchmark rate. According to the bill summary of S. 1895, if a bill goes to arbitration, formally referred to as Independent Dispute Resolution (IDR), the arbitrator will consider information offered by both parties such as the training of the provider, patient acuity, market share of each party and other relevant information.
While reaching this bipartisan, bicameral agreement is a positive development, Congressional leadership has not indicated if they are in support and some health groups have already come out in opposition as described here. But, the President himself has already expressed strong support for the compromise which just might be enough to get the bill across the finish line before the year ends.
Thank you for the information