Health Policy Report – May 02, 2023

Energy and Commerce Health Subcommittee Holds Hearing Focused on Site Neutral Payments, PBMs

On April 26, the Energy and Commerce (E&C) health subcommittee held a hearing on health care cost legislation, entitled “Lowering Unaffordable Costs: Legislative Solutions to Increase Transparency and Competition in Health Care”. The hearing was a follow-up to their March hearing. This time, however, lawmakers considered 17 health proposals and heard testimony from Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure. 

Lawmakers showed bipartisan interest in changing Medicare payment policies to pay the same for some services, regardless of where they are delivered. E&C looked at multiple bills that would expand site-neutral pay policies in Medicare – one of which would set site-neutral pay for hospital off-campus facilities, with a four-year phase-in. Another would implement site-neutral pay across ambulatory settings, a policy previously suggested by the Medicare Payment Advisory Commission (MedPAC). 

Industry groups, including the American Hospital Association (AHA), continue to express staunch opposition to site-neutral policies, claiming hospitals offer more integrated care that justifies higher reimbursement. “Expanding site-neutral cuts to additional HOPDs would endanger the critical role that HOPDs play in their communities,” Ashley Thompson, Senior Vice President of Public Policy Analysis and Development at AHA, shared in her testimony. 

Yet, lawmakers maintain that site-neutral payments can generate needed Medicare savings. “The Committee for a Responsible Federal Budget estimated site neutral policies would save Medicare patients $94 billion over ten years,” said Chair Cathy McMorris Rodgers (R-WA) in her opening statement. Meanwhile, Representative Anna Eshoo (D-CA) stated that it does not make sense for hospitals to charge more when “it’s the same doctor, it’s the same service, it’s the same site.”

The Committee also heard powerful testimony in support of site neutral payments from the Leukemia and Lymphoma Society and the American Benefits Council. Though these proposals would have to move through a polarized Congress with debt proposals looming, it’s clear that site neutral payment reform is quickly gaining momentum amid frustrations with the hospital industry. 

The subcommittee also considered three bills that aim to address pricing practices by pharmacy benefit managers (PBM), including the Drug Transparency in Medicaid Act of 2023, The PBM Accountability Act, and a draft bill that would create cost-sharing limits on “highly rebated drugs”. 

To watch the hearing and read witness testimony, CLICK HERE.

Senate Leaders Release Bipartisan Plans for PBM Reform  

Pharmacy benefit manager (PBM) reform is gaining momentum in the U.S. Senate. On April 20, Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) released a framework for bipartisan legislation to regulate PBMs and reduce the cost of drugs for U.S. patients and taxpayers.

The Wyden-Crapo framework details four key pillars of agreement: the misaligned incentives of PBMs are driving up drug prices; insufficient transparency is distorting the market; PBMs are erecting barriers to pharmacy access, especially in rural and underserved areas of the country; and, PBMs impede competition while driving up costs, including seniors’ out-of-pocket costs. Though vague on specific proposals, the framework delineates several potential policy solutions including:

• Delinking PBM compensation from drug prices to align incentives for lower costs
• Enhancing PBM accountability to health plan clients to drive cost-cutting competition and produce better choices for beneficiaries
• Ensuring discounts negotiated by PBMs produce meaningful savings for seniors
• Addressing and mitigating practices that unfairly inflate the prices patients and government programs pay for prescription drugs
• Modernizing Medicare’s “Any Willing Pharmacy” requirements to improve options and access for seniors
• Increasing transparency to foster a better understanding of how financial flows across the prescription drug supply chain impact government health care programs

On April 25, Senate HELP Committee Chairman Bernie Sanders (I-VT) and Ranking Member Bill Cassidy (R-LA) released a bipartisan bill that would increase transparency for PBMs and insurers that utilize PBMs. The Pharmacy Benefit Manager Reform Act of 2023 would also ban the practice of spread pricing, which occurs when a PBM charges a patient’s health plan more than it paid the pharmacy for the necessary drugs. Additionally, it would require PBMs to pass along 100 percent of the rebates they collect from pharmaceutical companies to health plans. A markup for the bill will be held on May 2.

To read the joint press release from Senators Wyden and Crapo about the legislative framework, CLICK HERE.

To read the text of the Pharmacy Benefit Manager Reform Act, CLICK HERE.

To watch the Senate HELP Committee markup, CLICK HERE.

Hospitals Facing Increased Scrutiny from Lawmakers
Scrutiny over hospital practices resulted in a wave of congressional activity examining ways to reduce consolidation and lower costs for patients. On April 18, Senator John Kennedy (R-LA) introduced the 340B Reporting and Accountability Act to prevent fraud and bring transparency to the 340B drug pricing program. If passed, the legislation would require hospitals to pass 340B savings to their patients and report the total amount of money received from 340B, the total amount the covered entity paid for outpatient drugs, and how excess revenue from the program is spent, to the Department of Health and Human Services (HHS). 

During an April 26 hearing on health costs, the House Energy and Commerce Health Subcommittee considered a similar draft bill, by Representative Larry Bucshon (R-IN), to ensure transparency and oversight of the 340B drug discount program. During the hearing, Centers for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure also announced that the agency is updating its enforcement process for hospitals’ federal transparency requirements. Now, hospitals will have 90 days after a corrective action plan (CAP) is requested by CMS to be in full compliance. 

On April 26 the House Ways and Means Committee held a hearing on tax-exempt hospitals and the community benefit standard – an issue that has received renewed attention as a result of recent reports showing that the community benefit provided by nonprofit hospitals is insufficient to justify their tax status. Three years ago, the Government Accountability Office (GAO) recommended that Congress authorize the government to redo tax forms for nonprofit hospitals, so they would have to disclose data on the benefits of their tax exemptions and how much “community benefit” they provide. Yet, Jessica Lucas-Judy, an official at GAO, testified at the hearing that Congressional action in accordance with this recommendation remains to be seen. Meanwhile, in her testimony, Dr. Ge Bai described how nonprofit hospitals take advantage of tax exemptions such as sales and property tax as well as tax-exempt contributions and 340B benefits.

These policies are quickly gaining support, even outside the halls of Congress. Notably, a group of think tanks and policy experts launched a coalition, entitled Americans for Prosperity, to push for reforms that enhance hospital competition and lower patient costs. On April 25, the group sent a letter urging Members of Congress to “advance reforms that promote site-neutral payments in Medicare and site of service billing transparency in commercial health insurance.” The coalition, which includes ideologically diverse groups, is another step demonstrating that site-neutral payment reform could have momentum this Congress.

To read bill text and a press release on the 340B Reporting and Accountability Act, CLICK HERE.

To read text of Rep. Bucshon’s 340B draft bill, CLICK HERE. 

To read a CMS fact sheet on updated hospital price transparency enforcement, CLICK HERE.

To watch the House Ways and Means hearing on tax-exempt hospitals, CLICK HERE.

To read Americans for Prosperity’s letter to Members of Congress, CLICK HERE.

White House Plans to Nominate Dr. Monica Bertagnolli as Director of the National Institutes of Health (NIH)

The Biden Administration is expected to nominate Dr. Monica Bertagnolli, a cancer surgeon, to serve as the next director of the National Institutes of Health (NIH). The NIH, which is responsible for conducting and supporting biomedical research throughout the U.S., has not had a permanent director since Francis S. Collins stepped down in December 2021 Since then, Lawrence A. Tabak, an NIH administrator, has been serving as acting director.

If nominated and confirmed by the Senate, Dr. Bertagnolli would have to contend with increasing partisan scrutiny around the NIH. Republicans have been seeking answers about whether the agency’s funding of virus research contributed to the pandemic, while Democrats have raised concerns about the agency’s model and structure. 

Last October, Dr. Bertagnolli became the director of the National Cancer Institute (NCI). Soon after assuming her leadership role at the NCI, Dr. Bertagnolli announced that she had received a diagnosis of early breast cancer and underwent treatment. 

Before joining the National Cancer Institute, Dr. Bertagnolli was a professor of surgery specializing in surgical oncology at Harvard Medical School. Her past research has focused on the gene mutation that spurs the development of gastrointestinal cancer and on the role that inflammation plays in the growth of cancer.

To read more about Dr. Monica Bertagnolli, CLICK HERE.