Telehealth and doctors win, PBMs lose as government funding deal nears

Congress reached a government funding deal Tuesday, with a significant healthcare package that includes an extension of Medicare telehealth policies, boosts for doctors' pay, and a raft of new restrictions on drug market middlemen.

Lawmakers rushed to finalize text of what's known as a continuing resolution so they could pass government funding before it runs out on Friday night. The bill would last until March 14 for general funding, although the healthcare provisions last longer.

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Other significant health provisions in the bill include canceling $8 billion in safety-net hospital payment cuts, extending bonuses for accountable care organizations that participate in Medicare alternative payment models at 3.5% for 2025, and renewing policies allowing for hospital-at-home programs in Medicare for five years.

The telehealth extension, which was sought-after by industry groups, would last for two years. The bill also includes provisions to better identify when telehealth services are rendered.

The bill also would grant physicians a 2.5% increase in fee-for-service Medicare reimbursements, after the Centers for Medicare and Medicaid Services set a 2.9% cut last month.

The agreement includes a significant win for safety-net hospitals. The bill would eliminate an $8 billion cut to Medicaid DSH payments scheduled to take effect this year under the Affordable Care Act of 2010, and delay $16 billion in further cuts until 2027.

"We worked really hard to achieve consensus on a bill that responsibly funds the government," House Speaker Mike Johnson (R-La.) told reporters shortly before the healthcare package was obtained by reporters.

One of the big holdups was over agricultural spending, but other issues stalled the bill's release. Johnson said he intends to follow the House rule of allowing 72 hours for members to review a bill before holding a vote. That would place it Friday afternoon.

Perhaps the biggest surprise in the measure is the extensive set of measures changing how pharmacy benefit managers can get paid.

Debates over the measures have been especially fierce, with advocacy spilling into social media. Reps. Buddy Carter (R-Ga.) and Diana Harshbarger (R-Tenn.) have argued for restrictions, while others such as Rep. Chip Roy (R-Texas) suggested provisions under discussion were questionable policies backed by drug companies.

One member said the debate between Carter and Roy spilled out in the conference meeting Tuesday.

The case for PBM restrictions seemed to get a boost Monday when President-elect Donald Trump said in a news conference that he wanted to knock out the middlemen.

The measures in the bill include a number of transparency requirements and bans on so-called delinking and spread pricing in Medicare and Medicaid. Often PBM compensation is linked to the list price of a drug, and they get compensated based on how much of a price cut they negotiate. They can also take a cut of the "spread" — the difference between what a drug's list price is and the negotiated rate.

A separate section of the bill would also apply similar changes to the broader market of employer-sponsored plans. That section would also institute greater reporting and transparency rules and require PBMs to pass along to plan sponsors and employers all of the saving that they negotiate. They would have to charge a fixed fee for their services. Those provisions would take effect 30 months after the bill is signed into law.

Pharmacy benefit managers and their trade association, the Pharmaceutical Care Management Association, have vehemently opposed such measures, saying they will harm the ability to negotiate good prices and hand greater profits to drug companies.

Many of the ideas already passed House or Senate committees, but stalled while PBMs and allies mounted a fierce lobbying campaign against them. The House passed the Lower Costs, More Transparency Act of 2023 with PBM restrictions and transparency rules. The Senate Finance Committee advanced the Modernizing and Ensuring PBM Accountability Act of 2023 and Better Mental Health Care, Lower-Cost Drugs, and Extenders Act of 2023. The Senate Health, Education, Labor and Pensions Committee also passed the Pharmacy Benefit Manager Reform Act of 2023 affecting the broader commercial market.

Other healthcare measures that are part of the package include:

• Extensions of funding for programs such as community health centers and graduate medical education.
• Extensions of pandemic preparedness and opioid treatment programs.
• Extensions of payment enhancements in Medicare for low-volume hospitals, Medicare dependent hospitals, and doctors serving patients in certain geographic areas.
• A provision that would require hospitals include a separate identifier for outpatient departments.
• FDA-related provisions that would target so-called patent thickets and ease generic approvals.

The bill also would require Medicare Advantage plans to ensure their provider lists are up to date, and aren't so-called “ghost networks” with phantom providers.

“There’s a lot more work to be done to improve mental healthcare for all Americans, but making sure you can find a doctor when you need care is step one," said Senate Finance Committee Chair Ron Wyden (D-Ore.).

Some items that did not make it into the bill include restrictions on prior authorization in Medicare Advantage and a provision to impose site-neutral pricing for hospitals.

Items that do not make this round of government funding are likely to return next year, as soon as March, when the rest of fiscal 2025 spending will need to be passed.

Rep. Dr. Greg Murphy (R-N.C.) hailed the PBM measures, though he allowed Congress might have to look again at the pharmaceutical industry.

"The rebates should be going to patients, and we do need to work on our pharmaceutical industry," Murphy said in an interview. "Some of the charges that they make are out of control."

Rep. Dr. Brad Wenstrup (R-Ohio), who is leaving Congress at the end of the year, also hailed the package, but said Congress should have fully restored the Medicare cuts to physician pay. Lawmakers will have to look at physician pay in the future, he said.

"That's something we better be able to fix in the next term or you're not going to have doctors," Wenstrup said.