House committees introduce new healthcare price transparency legislation

A trio of House committees unveiled new legislation (PDF) Friday to lower costs and increase transparency for patients.

The Lower Costs, More Transparency Act includes provisions from the House Energy and Commerce Committee, the Ways and Means Committee and the Education and the Workforce Committee and is designed to help patients be more informed when making healthcare decisions regarding cost of care, treatment and services.

It requires hospitals, payers, labs, imaging providers and ambulatory surgical centers to list prices they will charge patients through machine-readable files and mandates insurers and pharmacy benefit managers disclose drug rebates and discounts, according to a news release.

PBMs would be required to provide employers with semiannual prescription drug spending data like total out-of-pocket spending and formulary placement rationale. Medicare Advantage organizations would need to report to the Department of Health and Human Services when they share common ownership with providers, PBMs and pharmacies, the act details (PDF). The Medicare Payment Advisory Committee would be mandated to report on vertical integration between these parties.

It’s the latest example of PBMs drawing the ire of legislators. In July, the Senate Finance Committee voted during a markup hearing to support bipartisan efforts to rein in practices that allow PBMs to operate in the shadows, particularly through spread pricing.

The Pharmaceutical Care Management Association (PCMA) released a statement arguing the legislation does nothing to reduce the cost of prescription drugs for patients, instead allowing pharma companies to keep prices high and boost their own wallets.

"Instead of focusing on legislation that risks increasing drug costs, Congress should refocus on enacting policies that promote more competition in the prescription drug marketplace, including policies that eliminate common and egregious drug company practices aimed at extending patents in highly anti-competitive ways,” said JC Scott, PCMA president and CEO.

House members hope the bill will lower out-of-pocket costs for seniors that receive medicine at a hospital-owned outpatient facility, expand access to generic drugs and help employers give their employees the best information possible.

“Our bipartisan legislation meets this moment by giving patients what they are rightfully demanding: the ability to get the right care, at the right time, at a price they know and can afford,” said Rep. Cathy McMorris Rodgers, R-Washington, chair of the Energy and Commerce Committee, in a statement. “It will lower costs by giving patients the health care price information they need to make the decisions that are best for them and their families—something 95% of Americans support.”

Several ranking members added a provision that would ban spread pricing in Medicaid. The section would also prohibit PBMs that contract with Medicaid managed care organizations from utilizing spread pricing. States instead would have to reimburse PBMs with an administrative fee for managing the pharmacy benefit for Medicaid beneficiaries.

"Polls show that voters are concerned with the affordability of healthcare, but policymakers seem distracted by policies limiting the functionality and flexibility of those tasked with pharmacy benefit design,” said Alex Brill, CEO of Matrix Global Advisors. “Proposals aimed at PBMs—such as delinking or a ban on spread pricing—do nothing to address drug prices and may raise pharmaceutical spending overall. Congress should focus on policies that encourage competition among drugmakers if the objective is to tame spending.”

“In addition to bringing much-needed transparency to lower health care costs for Americans, the bill also increases funding for important health care programs including Community Health Centers and Teaching Health Center Graduate Medical Education,” said Rep. Frank Pallone, D-New Jersey, in a statement.

Community Health Centers focuses on helping patients in rural and underserved areas. Other investments will go toward training doctors in new communities, preserving Medicaid funding for hospitals serving uninsured or low-income patients and extending funding for diabetes research.

Ways and Means Committee Chair Rep. Jason Smith, R-Missouri, said the legislation should help patients fight against the effects of consolidation and the “increasingly common practice of vertical integration” in health care delivery that drives up costs.

Cuts to Medicaid Disproportionate Share Hospital payments through the proposed legislation would equate to $8 billion per year in Medicaid funding. Another section would eliminate $7 billion in funds from the Medicaid Improvement Fund.

“Hidden fees, dishonest billing and other harmful practices in the health care industry have left patients in the dark about the cost of care,” said Rep. Virginia Foxx, R-North Carolina, chair of the Education and the Workforce Committee, in a statement. “No patient should be saddled with higher premiums just because he or she wasn’t presented with all of the facts. This good faith effort will allow patients to cut through the confusion in the health care marketplace and make informed decisions.”