Buckle-up as legislation starts to make its way through congress. Congress has set its sights on enacting PBM reforms, codifying and improving the Hospital Transparency and the Transparency in Coverage Rules and improving and strengthening the Gag Clause Prohibition and data-sharing requirements. Timing on whether and when a PBM/Transparency/Data-Sharing legislative package could make it to the President’s desk remains unclear. But what is clear is that Congress is ready to rock-and-roll on these issues.
PBM Reforms
Whether you agree or disagree, the notion that PBMs are behaving badly is now widely accepted among Members of Congress. As a result, Congress wants to “shine a light” on PBMs, including their pricing practices, the fees they charge, the amount of rebates and discounts they retain and even whether and when a PBM is steering patients to pharmacies owned by the PBM. To accomplish this policy goal, Congress intends to require PBMs to disclose all of the above noted information through a detailed report furnished directly to the plan sponsor of a health plan.
Congress also wants to prohibit certain PBM practices like “spread pricing” (where a PBM charges a health plan more than the PBM pays for the drugs covered by the plan). In addition, Congress wants to require PBMs to fully “pass-through” the rebates, fees, discounts or any other compensation they receive to the health plan and its participants.
These PBM reforms have been percolating in Congress for the past few years, but this could be the year. The Senate HELP Committee has already approved PBM reforms on a bi-partisan basis. Senate Majority Leader Chuck Schumer (D-NY) has also declared that he wants to bring the Senate HELP Committee’s PBM bill to the Senate floor sometime this Fall/Winter. And, House Republican Leadership is readying legislation – which will include similar PBM reforms – to be acted upon by the end of September.
Transparency
Celebrated in many corners of the health care industry – but loathed by some – the Hospital Transparency and the Transparency in Coverage (TiC) Rules are here to stay. And now, Members of Congress want to officially memorialize these Rules in Federal statute, which will ensure that any future Administration cannot rescind or significantly alter these requirements through regulations. That’s a pretty big deal.
Another pretty big deal is increased enforcement measures to make sure that hospitals are properly and appropriately disclosing ALL the required pricing information (e.g., the gross charge, payer-specific negotiated rate and the cash-pay price for a particular medical item or service) on a public website for all to see. Increased penalties would also be assessed if hospitals fail to comply.
When it comes to the TiC Rule (which requires insurance carriers and self-insured plans to (1) furnish real-time, cost-sharing liability and other pricing information to participants through an on-line tool and (2) disclose in-network rates and out-of-network allowed amounts on machine readable files (MRFs) through a public website), Congress wants to codify this Rule in Federal statute. Although much-needed improvements to the MRFs are unlikely to make it into this legislation, the Federal Departments remain free to make any MRF improvements through regulations, and Congress will encourage the Departments to do just that.
Data-Sharing
The Gag Clause Prohibition – enacted into law at the end of 2020 and effective for the past 2½ years – was intended to require owners of provider networks (e.g., insurance carriers that “rent” their provider networks to self-insured plans) to share a plan’s health claims data with the plan and the plan sponsor.
However, despite this new provision of the law, some owners of the provider networks may continue to refuse to share the plan’s claims data. Here, the owners of the provider networks may knock out any restrictions in the agreement between (1) the plan and (2) the owner of the provider network (in compliance with the Gag Clause Prohibition), BUT contend that “downstream” agreements in which the plan is not a party (e.g., agreements between the owner of the provider network and a TPA or a medical provider) restricts any data-sharing.
Even in cases where an owner of the provider network agrees to share the claims data with the plan, the owner may STILL restrict the plan from (1) sharing the claims data with third-parties hired by the plan to assist in the plan’s administration and (2) using the claims data to, among other things, conduct audits of the payments the plan’s Claims Administrator is making on behalf of the plan, monitor the plan’s service providers, and undertake efforts to keep the plan’s cost low.
If you were to ask the plan sponsor community, they would likely tell you it is obvious that the current Gag Clause Prohibition provision needs to be amended to allow plans to share and use the claims data as described above. However, it is unclear whether we will see these data-sharing requirements make their way into a final legislative package.
The current Gag Clause Prohibition also requires plan sponsors to “attest” that the plan’s agreements with owners of the provider networks do not include restrictions on accessing claims data. However, because plan sponsors may not be rightfully getting their claims data if the owners of the provider networks refuse to share, these plan sponsors may not be able to rightfully “attest” that they are in compliance with the law.
The PBM/Transparency/Data-Sharing legislative package should help by allowing plan sponsors to (1) say that they cannot “attest” to compliance and then (2) explain to the Federal Departments why they cannot “attest.” It is likely that penalties would be imposed on owners of the provider networks if they cause the plan to be out of compliance with the Gag Clause Prohibition.
What’s Next?
Over the next few months, the House and Senate are going to be busy trying to pass the annual spending bills to keep the government funded. BUT, expect some sort of action on a PBM/Transparency/Data-Sharing legislative package. It could get bumpy…
The information provided does not, and is not intended to, constitute legal advice; instead, all information and content herein is provided for general informational purposes only and may not constitute the most up-to-date legal or other information.
