The House of Representatives voted on Monday night to pass a bipartisan healthcare policy bill to make hospital prices more transparent and ban some practices by pharmacy benefit managers.
The bill, called the Lower Costs, More Transparency Act, would also equalize payments for drugs in Medicare regardless if they’re administered in an hospital outpatient departments or doctor’s offices.
It would also delay payment cuts for hospitals that treat high volumes of uninsured patients. The cuts, which were expected to come due next year, are now delayed until 2026.
The bill now heads to the Senate. Lawmakers praised the bill, which passed on a 320-71 vote.
“This bipartisan legislation delivers on our commitment to lowering health care costs and providing increased transparency for patients — something 95 percent of Americans support,” said Rep. Cathy Rodgers, R-Wash., chair of the House Energy and Commerce Committee, in a statement.
Hospitals lobbied against provisions in the bill that would equalize drug payments in Medicare to medical facilities regardless of ownership. Trade groups, including the American Hospital Association and Federation of American Hospitals, sent letters to Congress last week urging lawmakers to vote against the bill.
Currently, hospitals outpatient departments receive higher drug reimbursements in Medicare compared to independent physician offices or ambulatory service centers. Hospital-owned clinics can also charge additional fees to cover what hospitals say are additional overhead costs accrued by receiving generally sicker patients and having to invest in around-the-clock emergency care.
Hospitals argue that the policy, dubbed site-neutral, would cut hospital revenue. The bill would cut hospital payments by more than $3.7 billion over 10 years, according to the Congressional Budget Office.
“Government underpayment is a long-standing issue that needs to be addressed, not exacerbated,” the AHA wrote in a letter sent to Congress last week. “This proposal would expand upon these shortfalls, further exacerbating the financial challenges facing many hospitals and threatening patients’ access to quality care.”
The bill would also require hospitals, insurers and imaging providers to disclose prices for services in consumer-friendly formats, and gives federal regulators the power to enact penalties on providers if they don’t comply.
Prices for medical services can vary widely, even within the same geographic market. The federal government has attempted to crack down on price transparency, passing regulations requiring hospitals to disclose certain rates for services. However, hospital compliance with the regulations has been spotty or incomplete.
The legislation also includes price transparency reforms for PBMs — the drug middlemen that sit between health insurers, drug manufacturers and pharmacies. PBMs negotiate drug rebates with manufacturers in exchange for placing them on payer clients’ formularies.
PBMs would be banned from spread pricing, when the PBMs charge more than they pay for drugs in Medicaid. They would also be required to disclose rebates, fees or other types of compensation to brokers.
The drug middlemen have been the target of federal scrutiny recently for their role in rising drug prices. Several Congressional committees and the Federal Trade Commission have launched investigations into PBMs.
The three biggest PBMs — CVS Caremark, Express Scripts and OptumRx — control nearly 80% of the prescription drug market and are owned by health insurers.
PBMs have been accused of anticompetitive and opaque business practices, including steering patients toward owned pharmacies and charging insurers hidden fees.
PBM trade groups pushed back against the bill, arguing that the policies undermine attempts by the middlemen to lower drug prices.
“Lowering drug costs simply cannot be achieved by focusing on PBMs, the only member of the supply chain working to lower drug costs, while ignoring the other actors, especially drug companies, which alone set and raise drug prices,” said the trade group Pharmaceutical Care Management Association, in a statement on Monday.
Health insurers and PBMs have announced initiatives they say will improve price transparency in response to rising federal scrutiny.
Last week, CVS — which owns insurer Aetna — announced it would change how its retail pharmacies get paid for prescription drugs. The company announced it would price drugs based on the amount it paid for them, plus a defined markup and additional fee.
