The House of Representatives passed a wide-ranging package of healthcare legislation Monday night that among other things would institute new transparency and pricing rules on pharmacy benefit managers and hospitals, and spares hospitals from some cuts while likely imposing others.
The Lower Costs More Transparency Act of 2023, approved on a bipartisan 320-71 vote, would require extensive new disclosures of prices and costs by hospitals, insurers, imaging services, diagnostic laboratories and PBMs. It also bans PBMs from the practice of spread pricing in Medicaid, requiring them to pass on savings they negotiate with drug companies and instead get paid a set administrative fee.
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For hospitals, the bill helps those that treat a disproportionate share of uninsured patients by delaying for two years Disproportionate Share Hospital, or DSH, cuts. The cuts were written into law in the Affordable Care Act on the assumption that with more people insured, hospitals would deliver less uncompensated care, but that has not happened. The bill pushes off $8 billion in DSH cuts for each of the next two years.
Hospitals came out in opposition to the bill because it also includes so-called site neutrality provisions that bar hospitals in the Medicare program from receiving higher payments for administering drugs in hospital-owned doctors' offices than an independent doctor would receive.
"While the AHA appreciates inclusion of a two-year delay on DSH cuts, we have been very clear regarding the harm that would be done to our nation’s hospitals if so-called site-neutral cuts to Medicare were adopted," said Rick Pollack, president and CEO of the American Hospital Association in a statement released before the bill passed.
The AHA has argued that when its doctors administer drugs in offsite clinics, it is not the same as when a free-standing physician's office does it because hospitals have greater requirements and costs. If hospitals can't charge more, it would limit access, the AHA has argued in letters to Congress.
The bill phases in the cuts over four years, starting in 2025. The Congressional Budget Office estimated the provision would save the government $3.7 billion over 10 years. A related provision requiring hospitals to assign separate identification numbers for off-site providers would save another $400 million, the CBO found.
The Federation of American Hospitals, a trade group representing for-profit hospitals, weighed in after the vote by calling for the site-neutral provisions to be dropped from the bill.
“As we look ahead to critical funding deadlines in January, FAH urges members of Congress to prioritize access to hospital care for patients by not only protecting Medicare, but also strengthening the health care safety net by delaying DSH cuts for two years,” said Chip Kahn, the group’s president and CEO.
Large pharmacy benefit managers have also opposed the bill, saying measures such as the spread-price provision interfere with their ability to cut the best deals while handing money back to drug companies. Pharmaceutical Care Management Association President and CEO JC Scott said when the bill was first unveiled that it would also "enmesh Congress into private-sector contracting," and hand drug companies information they could use to raise prices. The trade group did not comment specifically on the bill's House passage.
The Senate does not have a specific package of legislation that matches the Lower Costs More Transparency Act, but committees in the upper chamber have advanced numerous similar pieces of legislation that resemble its components. In order for the provisions to become law, the Senate would either have to take up the House-passed bill or pass its own version and then work out the differences with the House.
Another key part of the bill is an extension of funding for community health centers. The bill would spend $4.4 billion a year to support the Community Health Center Fund through 2025. It also extends the National Health Service Corps through 2025 and funds the Teaching Health Center Graduate Medical Education program through 2030.
Lawmakers hailed the bill as a bipartisan triumph for patients.
"It ensures that senior citizens on Medicare never pay more for a drug because of where it is administered," Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) said during debate on the measure. "And it makes drug prices transparent to help patients and employers get the best deals possible on medicines. Over 90% of Americans support increased price transparency in health care, and by passing this bill we will be delivering results people are counting on."
"This bipartisan bill does exactly what it says it does," said the top Democrat on the committee, Rep. Frank Pauline (D-N.J.) "It delivers lower health care costs for the American people and brings much needed transparency to our nation's health care system."
