Here’s what you need to know about the Lower Costs, More Transparency Act

A House vote on transparency regulations in healthcare could occur next week, potentially having substantial ramifications on how PBMs and hospitals operate. 

Called the Lower Costs, More Transparency Act, the legislation would ban spread pricing in Medicaid, force PBMs and providers to adopt President Trump-era transparency rules, push closer toward site-neutral payment reform, extend a federal program due to expire and approve funding increases for community health centers. The package, negotiated by three separate House committees, has drawn strong opinions from advocacy groups and organizations.

Lisa Hunter
Senior director Lisa Hunter (US of Care)

“The fact that you have all three committees in the House reporting these solutions is nothing short of significant progress,” explained Lisa Hunter, the senior director for policy and external affairs for US of Care, a nonpartisan organization advocating for affordable and equitable healthcare. “Does it have everything that everybody wants? By necessity, I don’t think any bill that gets through Congress has everything that everybody wants.”

She described transparency regulations as a meaningful first step to reform healthcare for the average person.

The National Community Pharmacists Association pushed for a ban on spread pricing in Medicaid managed care programs, as outlined in their 2023 legislative priorities (PDF). They also support requiring reimbursements based on the sum of average acquisition costs the state’s Medicaid fee-for-service dispensing fee, which mandates pharmacies respond to Centers for Medicare & Medicaid Services’ national average drug acquisition costs survey to boost transparency efforts in drug pricing.

“This is a critical opportunity to show that Congress can still work together to address issues that are most important to the people they serve,” said Families USA Executive Director Frederick Isasi in a statement. “Every family across this nation deserves to know exactly how much a big hospital corporation will charge them before they receive medical care and services.”

Other observers are uncertain about the effectiveness the bill will have if passed. Michael Strazzella, senior principal of Buchanan Ingersoll and Rooney, told Fierce Healthcare in November that the transparency provisions may not be the easy solution members of Congress believe.

“I never believed that any of these bills will have an immediate reduction in prices,” he said. “My mother has yet to ever go to the hospital prepared. She decides on which hospital she’s going to go to based on where she lives and what they recommend. Overall, I'm still not sold on transparency measures.”

Michael Strazzela
Senior principal Michael Strazzella (Buchanan Ingersoll and Rooney)

Hunter framed the Lower Costs, More Transparency Act as the culmination of interest among bipartisan legislators to change improve healthcare after seeing success for similar laws at a state level in both red and blue states.

“I don’t know that folks were anticipating site-neutral payment reform to make so much progress this year alone,” she said. “Starting in the spring, we really started to see a lot of federal momentum. coalescing around reforms that brought about more fair billing practices from the hospital sector.”

Federation of American Hospitals President and CEO Chip Kahn urged lawmakers this week to vote against the Lower Costs, More Transparency Act stating the site-neutral provisions will cut patient access to hospital care in rural counties. He said the cuts do not factor in that hospitals are paid “80 cents on the dollar by Medicare” and that hospitals require more funding than other sites of care due to around-the-clock care and a level of safety standard.

“While we strongly oppose the Medicare cuts in the Lower Costs, More Transparency Act, we also recognize the importance of Congressional efforts to lower healthcare costs and protect the healthcare safety net for the nations uninsured,” said Kahn in a statement. “So, we are encouraged by the inclusion of a delay in the implementation of Medicaid Disproportionate Share Hospital (DSH) cuts in this bipartisan package.”

The American Hospital Association added that it would like to see the legislation allow hospitals to use price estimator tools to meet shoppable services requirements and permit CMS to determine the maximum penalty assessed to noncompliant hospitals. It opposes a provision that requires 340B entities to report the difference between their acquisition cost and payments from Medicaid managed care organizations.

The bill was pulled from the schedule in September amid political turmoil in the House but could reemerge, as Politico reports. Because the vote will occur on the suspension of the rules calendar, it will require two-thirds approval. It’s expected some Democrats will vote in support of the GOP-led bill, but it’s unclear if Republicans will earn unanimous support from their own party due to the nature of the vote, reports Axios.

The House Energy and Commerce Committee advanced 44 healthcare bills earlier this week during a markup hearing, several of which target PBMs, a familiar foe of lawmakers in recent months. These bills include the Protecting Patients Against PBM Abuses Act and the Medicare PBM Accountability Act. Another bill would undo the 2024 physician pay cut, reversing a decision from the Biden Administration the American Medical Association criticized.

National Association of Chain Drug Stores CEO Steven Anderson shared his approval with the PBM markup reform earlier this week with Fierce Healthcare.

“We continue to see clear alignment between committee action in the U.S. House and Senate on PBM reforms for Medicare and Medicaid," hes said. "NACDS urges the U.S. Congress to capitalize on this historic and bipartisan momentum, and to prevent PBMs from complicating and derailing the legislation and the process."

While the NCPA said they were concerned about changes made to pharmacy provisions ahead of the markup hearing, they remain optimistic lawmakers will “fix disparities between vertically integrated PBM-affiliated pharmacies and independent pharmacies.”

Editor's Note: The story has been edited to reflect the AHA opposes the 340B provision.