CONGRESS.
Energy & Commerce Gets Busy. HCA (-), THC (-) #muniland (-) With the large caveat that the future of any House legislation rides on Senate interest, which heretofore is not evident – the House Energy and Commerce Committee reported out a number of health-related bills this week. A selective list:
- Patient Act of 2023. Among other things, the bill strengthens the provider price transparency requirements of the Affordable Care Act, ultimately implemented under the Trump administration. This includes raising the penalty for non-compliance to $5M. It also improves the price transparency requirements of health insurers as well as reporting on M&A, ownership structure and common control of providers, insurers and pharmacies.
- Providers and Payers COMPETE Act of 2023. This bill would require more reporting on provider and payer consolidation.
- 340B Transparency & Oversight. The opaque and often abused 340B program's participants would begin to report and be subjected to audit on drug price discounts.
- Fairness for Patient Medication Act. This bill would limit cost sharing on highly-rebated drugs.
Takeaway – it is nice to see less interest in “go big” and more energy put into solving health care’s problems surgically. The brazen opaqueness of the system makes it rife with inefficiencies. Were that producing great results in terms of patient care, most people might want to look the other way as they have done for years. Unfortunately, it doesn’t.
We need to see if the Senate gets interested. They have expressed interest in PBM reform so expect it to get traction first. Otherwise, this quasi-deregulation could fit nicely into a 2024 policy strategy.
Site Neutral Drug Administration. UNH (+), HUM (+) ELV (+) #muniland (-)The full Energy and Commerce Committee also cleared a bill that would pay the same Medicare rate for administration of Part B drugs regardless of the site of service.
While paying more for administration in a hospital may have made sense before other sites of service hadn’t developed technologically, it no longer does. Additionally, the disparity in payments has resulted in more provider consolidation, something Congress finds objectionable.
This bill would appear to amplify the drug price provisions of the Inflation Reduction Act’s inflation rebate provisions. A site-neutral law, implemented on a budget neutral basis would probably result in lower fee revenue for hospitals while increasing it for non-hospital providers.
In the cases of all bills reported out by Energy and Commerce, states with highly regulated health systems and little competition, like New York, will resist these changes and that could impact prospects in the Senate.
CBO Report on Health Insurance Coverage. CNC (-), MOH (-) UNH (-) ELV (-) The CBO reported this week that the uninsured rate in the U.S. was about 8.3% or about 29M people. The CBO expects 15M people will transfer out of the program (our estimate is closer to 17M) with about half of those moving to employer-sponsored insurance as new enrollees (3.2M) or existing enrollees (4.5M). The CBO further estimates 1.6M people will enroll in exchange plans.
If the CBO is right – and we think their numbers might be a bit low as states are reporting baseline enrollment higher than CMS reported figures – then approximately $2B PMPM is being paid to MCOs for enrollees that get coverage elsewhere.
Debt Ceiling. The XLV took a bit of a hit this week, supposedly over the possibility that the debt ceiling negotiations will mean lower federal outlays. Fortunately for health care, most of the fight will be over discretionary spending. Medicare and Medicaid are funded largely through mandatory channels. Additionally, after the experiences of 2010-11 and 2017, Republicans appear to be avoiding health care as a focus of fiscal responsibility.
The one area of concern will be the subsidization of exchange plans, especially for people making over 400% of the Federal Poverty Threshold. The expansion to include this group does not expire until after the 2024 election so the need to address is not immediate.
THE WHITE HOUSE.
Medicaid Prescription Drug Price Transparency. UNH (-), ELV (-), CNC (-), MOH (-) The White House issued a proposed rule that would improve transparency in the Medicaid drug rebate program. If finalized it would require the MCOs to require PBMs to report the cost of outpatient drugs and dispensing separately from all other fees.
Doing so would increase transparency but it would also remove the other fees component from the numerator of the MLR calculation. This policy would reduce the flexibility of MCOs to manage their MLR and thus, rebates they may be required to pay under their contracts.
The proposed rule would also require more oversight and reporting particularly on the classification of drugs between generic and brand.
Other Stuff.
Online Pharmacies. TALK (-), GDRX (-) TDOC (-) In attempt to address what is increasingly a problems the Asia-Pacific Economic Commission and the United State of Pharmacopeia released a toolkit to fight online pharmacies that distribute falsified and substandard medications.
Drugs for ADHD and weight loss drugs have been a focus, but it has become increasingly clear the drug supply chain has a few security breaches. This problem represents a threat to the telehealth industry in terms of reputational damage as well as the lucrative revenue stream that are drug sales.
Have a great long weekend.
Emily Evans
Managing Director – Health Policy
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