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Legislative Update, July 15, 2019 – Unwelcome Surprises in Bills to Address “Surprise Bills”

Congress is back from its Independence Day recess for a few weeks before it goes on an extended break for much of August. Marilyn Singleton, MD, JD takes a look at the health policy debates heating up on Capitol hill during the brief Summer session:

Big Negatives in the Lowering Health Care Costs Act of 2019

The big news was the Senate bill 1895, the Lowering Health Care Costs Act of 2019. This bill was introduced on June 19, 2019 by Sen. Lamar Alexander (R-TN) and referred to the Senate Health, Education, Labor, and Pensions (HELP) Committee. After mark-up the text was updated on July 8, 2019.

The bill is divided into five titles: (1) Ending Surprise Medical Bills, (2) Reducing the Prices of Prescription Drugs, (3) Improving Transparency in Health Care, (4) Improving Public Health, and (5) Improving the Exchange of Health Information. On June 18, 2109 the HELP heard testimony about the bill and Sen. Alexander is now hopeful the bill will move along toward passage.

This bill subsumes many individual bills introduced this year by Republicans and Democrats alike. The CREATES Act, intended to ease entry of generics and biosimilars has been bundled in as had a measure by Majority Leader McConnell that restricts purchase of tobacco products to ages 21 and older.

Presumably, if this bill goes nowhere, the individual bills might be pursued by their sponsors.

AAPS has objected to a number of provisions:

  1. Sections 102 and 103 impose price controls (euphemistically called “benchmarks” and bans on balance billing) that will lead to shortages and loss of patient access to independent physicians. Insurers are essentially handed near unilateral control over dictating prices.
  2. Provisions in Section 302 that would hand insurers more leverage to steer patients to “preferred providers.”
  3. The collection and sharing of medical claims data without patient consent enabled in Section 303
  4. Penalties up to $10,000 (for each violation) imposed on physicians, in Sections 304 and 305, for failing to update their network directory status or claim processing delays by insurers.
  5. Section 309 would require physicians to know how much a patient’s plan will pay for a procedure.
  6. Section 501 has provisions concerning the online availability of medical data, that appear detrimental to patient privacy, especially given the prevalence of data breaches and data theft.

AAPS outlined concerns (and suggestions for real solutions) in a letter to Senator Alexander and members of the HELP Committee. Many others are speaking out against the bill too, including former U.S. Solicitor General Paul Clement, who outlines the unconstitutional implications of the price controls and balance billing prohibitions. And as the Wall Street Journal reports, the bill may not see action by the full Senate this month, as previously hoped; however, signs point to an eventual vote, especially now that a favorable CBO score has been released.

(Update 7/25: further consideration of the Senate HELP bill has been officially delayed until at least September. In addition, the House Energy and Commerce Committee has passed surprise billing legislation, that was amended to include an arbitration process. See chart of all related bills here.)

What else is in the LHCCA? Hat tip to the American Health Insurance Plans for its summary, excerpts of which are copied below:

Summary Title 1: Ending Surprise Medical Bills

Section 101. Protection Against Out of Network Deductibles

For out-of-network care in a hospital emergency department or in a freestanding emergency room, the cost-sharing requirement (expressed as a copayment amount, coinsurance rate or deductible) is the same requirement that would apply if such services were provided in-network.

Section 102. Protection Against Surprise Medical Bills

Patients are held harmless from surprise medical bills.

Out-of-Network Ancillary Services. For emergency care, patients are only required to pay the in-network cost-sharing amount for out-of-network ancillary services at an in-network facility including any referrals for diagnostic services at in-network facilities. Ancillary, non-emergency services are defined as non-emergency services provided in a facility by anesthesiologists, pathologists, radiologists, neonatologists, assistant surgeons, hospitalists, intensivists, or other providers as determined by the Secretary. The term shall not include non-emergency services provided in a facility by a primary surgeon.

Notice before non-emergency services. Out-of-network, non-emergency services that are not ancillary services, from an out-of-network provider at an in-network facility, and such services would be covered under such plan or coverage if provided in-network, the cost-sharing requirement (expressed as a copayment amount, coinsurance rate, or deductible) shall be the same requirement that would apply if such services were provided by an in-network practitioner, and any coinsurance or deductible shall be based on in-network rates, unless, as soon as practicable, and in no case later than 48 hours prior to providing non-emergency services that are not ancillary services the enrollee consents acknowledging that out of network services may require higher cost sharing.

Balance billing is prohibited during emergency services, out of network ancillary services at an in-network facility, services furnished by an out-of-network provider after an enrollee has been admitted to the hospital for emergency services but prior to stabilization, and out of network services after stabilization at a facility where consent was not received.

Section 103. Benchmark for Payment.

For surprise bills, health plans would pay providers the local median contracted commercial amount under that plan or coverage that insurers have negotiated with other providers and agreed upon in that geographic area. Payments must be made in a timely fashion.

HHS will use notice and comment rulemaking to define geographic areas and establish a consistent methodology for health plans to use in calculating their own median contracted rates including consideration of adequate access to rural areas and health professional shortage areas in consultation with the National Association of Insurance Commissioners. Health plans without sufficient internal data in a given geographic area will have the option of accessing unbiased external data sources (such as a state’s all-payer claims database) to calculate an appropriate median rate for that market. Such databases shall be free of conflicts of interest and have sufficient information reflecting allowed amounts.

Title II Reducing the Price of Prescription Drugs

Section 201. Biological Product Patent Transparency

Increases transparency of patent information for biological products by requiring information to be submitted to the Food and Drug Administration (FDA) and published in the “Purple Book.”

203. Ensuring Timely Access to Generics

Maintains the use of citizen petitions to allow interested stakeholders, including drug companies, to notify FDA of concerns with pending generic and other follow-on drug applications. Addresses the abuse of the citizen petition process, which can be used to unnecessarily delay the approval of a drug application.

Provides that FDA may deny a citizen petition that is submitted with the primary purpose of delaying the approval of an application and clarifies criteria that FDA may use to make this determination. Requires a petition to be submitted within 60 days after the petitioner knew, or reasonably should have known, the information that forms the basis of the petition. Requires HHS to establish procedures for referring a petitioner to the Federal Trade Commission if determined that a petition was submitted with the primary purpose of delaying the approval of another application.

204. Protecting Access to Biological Products.

Clarifies that biological products, including insulin products, that will transition from the drugs pathway to the biologics pathway in March 2020, cannot receive new, extended market exclusivities. Preserves certain unexpired exclusivities for biological products as FDA transitions the regulation of such products from the drugs pathway to the biologics pathway.

205. Preventing Blocking of Generic Drugs.

Prevents first-to-file generic drug applicants from blocking, beyond a 180-day exclusivity period, the entrance of subsequent generic drugs to the market.

209. Streamlining the Transition of biological products. In March 2020, a small subset of biological products, including insulin, will transition from the drugs pathway to the biologics pathway, opening the biological products up to biosimilar competition.

214. Actions for Delays of Generic Drugs and Biosimilar biological products (CREATES Act)

Allows generic drug manufacturers to sue brand-name manufacturers for not selling them samples for testing. Allows generic companies to use separate safety protocols than those in place for the branded drug.

The generic maker would have to prove that the brand-name maker hasn’t delivered sufficient quantities generally within 31 days of a request. Courts would be authorized to award monetary damages sufficient to deter future gaming.

215. Reducing the Price of Prescription Drugs (FAIR Drug Pricing Act).

Requires a drug manufacturer to submit a report to the Health and Human Services Secretary for each price increase of certain drugs of which the wholesale acquisition cost increase is equal to 10 percent or more over a 12-month period or 25 percent or more over a 36-month period.

The report must be submitted no later than 30 days prior to the planned price increase date. With respect to the drug in question, the report must include: (1) The percentage that the wholesale acquisition cost will be raised; (2) The justification for the increase; (3) The initial developer’s identity; (3) A description of the price increase history; (4) The current list price; (5) The total expenditures of materials and manufacturing as well as acquired patents and licensing; (6) Expenditures on research and development; (7) Total revenue and profit generated; and, (8) Marketing and advertising costs.

Title III: Improving Transparency in Health Care

301. Increasing Transparency by Removing Gag Clauses on Price and Quality Information

Bans gag clauses in contracts between providers and health plans that prevent enrollees, plan sponsors, or referring providers from seeing cost and quality data on providers. Agreements cannot restrict the providing of provider-specific cost or quality of care information through a consumer engagement tool or other means or the electronic access to de-identified claims and encounter data for each enrollee as long as consistent with HIPAA, GINA and the ADA (includes allowed mounts, provider information, service codes or any other information normally in a claim)

Bans gag clauses in contracts between providers and health insurance plans that prevent plan sponsors from accessing de-identified claims data that could be shared, under HIPAA business associate agreements, with third parties for plan administration and quality improvement purposes. Issuers offering individual may not enter into an agreement with a health care provider, network or association of providers, or other service provider offering access to a network of providers that would, directly or indirectly restrict the health insurance issuer from: (1) providing provider-specific price or quality of care information, through a consumer engagement tool or any other means; or (2) sharing, for plan design, plan administration, and plan, financial, legal, and quality improvement activities with a HIPAA business associate

302. Banning Anti-competitive Terms in Facility and Insurance Contracts that Limit Access to Higher Quality, Lower Cost Care.

Prevents “anti-tiering” and “anti-steering” clauses in contracts between providers and health plans that restrict the plan from directing or incentivizing patients to use specific providers and facilities with higher quality and lower prices.

Prevents “all-or-nothing” clauses in contracts between providers and health plans that require health insurance plans to contract with all providers in a particular system or none of them. Provides an exception for certain group model issuers including HMOs or a value-based network arrangement.

Prevents “most-favored-nation” clauses in contracts between providers and health plans that protect an insurance company’s dominant position in a market by requiring that the insurance company be given the most favorable pricing of any health plan in the market.

Prohibits obligations on plan sponsors to agree to terms of contracts that the sponsor is not party to and cannot review, which could conceal anti-competitive contracting terms.

303. Designation of a Non-Governmental Nonprofit Transparency Organization to Lower Americans’ Health Care Costs.

Designates a nongovernmental, nonprofit entity to improve the transparency of health care costs. Directs HHS to contract with said nonprofit entity within one year of the passage of the legislation.

Establishes and appoint members to a 13-person advisory committee within 180 days after passage of the legislation. There is no designated seat on the committee for health plans.

Directs the nonprofit entity, in consultation with the committee, to define data elements to be collected as well as the format and standards of reporting for insurers. The nonprofit entity would also be responsible for creating privacy and security parameters/encryption in order to de-identify personal data and protect proprietary information. Requires an “applicable self-insured group health plan” to submit – through TPA, PBM, or other designated entity – all requisite medical and prescription drug claims data.

Although the legislation specifically addresses self-insured group health plans, it also allows states to require issuers to submit data to the entity in a standardized format. An applicable self-insured group health plan is defined as a plan or a plan’s TPA that administers benefits for more than 50,000 enrollees and/or is one of the 5 largest administrators or issuers, by aggregate number of enrollees in plans administered by that administrator in the state. Allows for the sharing of data with state-based APCDs at cost if the state contributes claim data to the nonprofit entity. Provides for the use of data by employers, employee organizations, researchers and policymakers assuming certain data security criteria are met.

304. Protecting Patients and Improving the Accuracy of Provider Directory Information

Network Status of Providers. Requires health plans to have up-to-date directories of their in-network providers, which shall be available to patients online, through oral confirmation kept in an enrollees file for a minimum of 2 years and provided in writing within 1 business day of a telephone inquiry. Print directories should a include an accurate as of date disclaimer.

Business Processes. Health plans must verify and update at least once every 90 days the information for all providers in the online directory and remove any provider from such online directory if they have not verified their information within the previous 6 months or the plan is unable to verify the provider’s network participation.

Cost Sharing Limitations. If a patient provides documentation that they received incorrect information from an insurer (based on electronic, written information or provided orally) about a provider’s network status prior to a visit, the patient will only be responsible for the in-network cost-sharing amount and providers shall reimburse enrollees for the full amount paid in excess of the in-network cost sharing amount plus interest.

Enforcement. Health care providers in violation or takes actions to prevent a group health plan from complying from requirements to verify information shall be subject to a civil monetary penalty of not more than $10,000 for each act of violation.

305. Timely Bills for Patients

Requires health care facilities and providers to give patients a list of services received upon discharge or at the end of the visit or by postal or electronic mail as soon as practicable and not later than 5 calendar days after discharge or date of visit.

Requires all adjudicated bills to be furnished to a patient within 45 days. If bills are received more than 45 days after receiving care, the patient is not obligated to pay.

Requires providers and facilities to give patients at least 35 days after postmark date to pay bills upon receipt. Provides for civil monetary penalties of up to $10,000 a day for facilities that fail provide a list of services 10 times.

306. Health Plan Oversight of PBMs.

Reports to Group Health Plan Sponsors. Requires that plan sponsors receive a twice annual report on the costs, fees and rebate information associated with their PBM contracts in a machine-readable format. Reports include:

(1) information from drug manufactures on co-pay assistance paid

(2) for each covered drug: the number of enrollees, the number of prescription fills, the total number of dosage units and the dispensing channel, wholesale acquisition cost, total out-of-pocket spending by enrollees on such drug, and for any drug exceeding $10,000 during the reporting period, a list of other available drugs and the rationale for preferred pharmacy placement

(3) a list of each therapeutic category or class: along with the total gross spending by the plan before rebates, fees or other manufacturer remuneration; the number of enrollees who filled a prescription for a drug in that category or class, a description of the tiers (including utilization mechanisms such as prior-authorization or step therapy), and the total out of pocket spending.

(4) for classes which 3 or more drugs are included on the formulary the amount received or expected to be received from drug manufacturers in rebates, fees, alternative discounts or other remuneration. (5) total gross spending on prescription drugs before rebates or other fees or remuneration

(6) total amounts received in rebates, fees, alternative discounts and all other remuneration from the manufacturer or other third party other than the plan sponsor related to utilization of drug or drug spending

(7) total net spending on prescription drugs

(8) amounts paid directly or indirectly in rebates, fees or another type of remuneration to brokers, consultants, advisors or any other individual or firm who referred the group health plans business to the PBM.

Spread Pricing. Prohibits PBMs from engaging in spread pricing, or charging a plan sponsor, health insurance plan, or patient more for a drug than the PBM paid to acquire the drug. Includes reporting and pricing requirements for PBMs that own mail-order, specialty, or retail pharmacies to require the pricing not exceed the lesser of the amount paid to the pharmacy for acquisition of the drug or the median price charged when the same drug is dispensed by other similarly-situated pharmacies not wholly or partially owned by the health insurance issuer or the PBM.

Full Pass Through Rebate to the Plan. Requires the PBM to pass on 100% of any rebates or discounts to the plan sponsor. Rebate contracts with drug manufactures to be made available to plan sponsors or designated third parties no later than 90 days after the end of such period. Rebate contracts with drug manufactures shall be available for audit subject to confidentially agreements to prevent re-disclosure.

Title V: Improving the Exchange of Health Information

501. Requirement to provide health claims, network, and cost information.

Health Claims, Network and Cost Information via API.

Requires commercial health insurers to make information available to patients through application programming interfaces, including: health insurance claims data, provider encounter data and payment data; in-network practitioners; and expected out-of-pocket costs.

Data to be available to an enrollee or former enrollees, the enrollee’s providers or any third-party applications or services authorized by the enrollee. Including identifying directory information for all in-network providers, including the capability to return the information necessary to establish a list of participating in-network facilities, practitioners in a given specialty or at a particular facility type within a geographic radius.

The plan must provide a list of ancillary services categories that the plan has no in-network providers. Emphasizes that all existing privacy, security protections and breach notification laws for patient health data under HIPAA and state laws apply.

503. GAO Study on Privacy and Security Risk of Electronic Transmission of Individually- Identifiable Health Information to and from Entities not covered by HIPAA

GAO study one year after enactment to better understand existing gaps in privacy and security protections for health information as patients move their information to third parties, such as mobile applications, that are not covered by the HIPAA privacy and security rules. The study would identify potential opportunities for improving the privacy and security protections for that health information.

Full text: https://www.govtrack.us/congress/bills/116/s1895/text.

What else is Congress up to? Here are some additional health policy bills under consideration:

Prescription Drug Pricing Reduction Act (PDPRA)

The Senate Finance Committee passed the Prescription Drug Pricing Reduction Act (PDPRA) Thursday, July 25. Under the legislation, Part D cost sharing by enrollees would be capped and price hikes for drugs in the program would be subject to limitations. “Chairman Grassley also indicated that he would support adding language to the bill that would reinstate the proposed prescription drug rebate rule the administration abandoned earlier this month, but this did not receive a vote,” reports HealthLeaders Media.

Read summary: https://www.finance.senate.gov/imo/media/doc/FINAL%20Description%20of%20the%20Chairman’s%20Mark%20for%20the%20Prescription%20Drug%20Pricing%20Reduction%20Act%20of%202019.pdf

“House Democrats will release a bill on drug pricing in September, Speaker Nancy Pelosi’s top health care aide,” reports Axios.

Unique Patient ID

H.R. 2740 is an appropriations bill funding numerous government agencies, including Health and Human Services and the Department of Defense. It recently passed the House and has moved to the Senate. Hidden inside is a provision to fund a National Patient ID that will essentially spell the end of medical privacy. 

Read More: https://www.cchfreedom.org/cchf.php/1547

Changes to Medicare

On April 4, 2019, S. 1030, the Retirement Freedom Act was introduced by Sen. Ted Cruz (R-TX) and referred to the Senate Finance Committee. This bill would allow individuals to opt out of Medicare. Such persons (1) may subsequently choose to end such election and opt back into such entitlement without being subject to any penalty; (2) shall not be required to opt out of benefits under title II of such Act as a condition for making such election; and (3) shall not be required to repay any amount paid under such part A for items and services furnished prior to making such election.

Full text: https://www.govtrack.us/congress/bills/116/s1030/text.

On Jun 18, 2019, H.R. 3302 was introduced by Rep. Amy Finkenaur (D-IA) and referred to the House Energy and Commerce and Ways and Means Committees. This bill would amend Medicare to improve the accuracy of geographic adjustment factors under the Medicare program and to permanently extend certain adjustments to such factors for certain localities, and for other purposes.

Full text: https://www.govtrack.us/congress/bills/116/hr3302/text.

On Jun 18, 2019, H.R. 3327, the Drug Price Transparency for Medicare Patients Act of 2019 was introduced by Rep. Francis Rooney (R-FL) and referred to the House Energy and Commerce and Ways and Means Committees. The bill provides statutory authority for the Centers for Medicare & Medicaid Services rule titled “Medicare and Medicaid Programs; Regulation to Require Drug Pricing Transparency,” published on May 10, 2019. The rule requires direct-to-consumer television advertisements for covered drugs and biologics under Medicare and Medicaid to include the list price of a 30-day supply or for a typical course of treatment, if the list price is at least $35 per month. The rule takes effect July 9, 2019.

This bill is necessary as a federal judge stopped a Trump administration initiative that would have required drugmakers to reveal the sticker price of their drugs in television ads. The decision from U.S. District Judge Amit Mehta in Washington, D.C., ruled that the Department of Health and Human Services does not have the regulatory power to make drug manufacturers include the cost of drugs in television commercials. Under the rule, if a medicine’s list price was more than $35 a month, it would have to be stated during the commercial. The challenge, opponents say, is that a drug’s list price and estimates of what people can expect to pay vary widely depending on coverage.

On May 21, 2019, H.R. 2883, the Chiropractors Equity Act of 2019 was introduced by Rep. Jackie Walorski (R-IN) and referred to the House Committee on Energy and Commerce and House Committee on Ways and Means Committees. The bill would allow chiropractors to provide items and services through private contracts with Medicare beneficiaries

Full text: https://www.govtrack.us/congress/bills/116/hr2113/text.

On April 30, 2019, S. 1240, the Restoring Rural Residencies Act of 2019 was introduced by Sen. John Tester (D-MT) and referred to the Senate Finance Committee. This bill requires the Centers for Medicare & Medicaid Services to reimburse medical residency training programs under Medicare for certain graduate medical education costs associated with resident time spent in rural community hospitals known as “critical access hospitals.”

Full text: https://www.govtrack.us/congress/bills/116/s1240/text.

On June 3, 2019, H.R. 3062, the Patient Access to Higher Quality Health Care Act of 2019 was introduced by Rep. Michael Burgess (R-TX) and referred to the House Energy and Commerce and Ways and Means Committees. This bill repeals specified limitations, for purposes of Medicare participation, on self-referrals by newly constructed or expanded physician-owned hospitals.

Full text: https://www.govtrack.us/congress/bills/116/hr3062/text.

Rolling Back President Trump’s Options for Patient Choice

On May 16, 2019 the House passed H.R.987 – Strengthening Health Care and Lowering Prescription Drug Costs Act. This bill started out as a bipartisan legislation to “remove barriers to generic drugs entering the market, and would crack down on tactics that lawmakers say pharmaceutical companies use to tamp down competition and keep prices high,” reports The Hill. But provisions were tucked in aimed at stopping reforms by the Trump Administration to increase patient access to lower cost coverage through short term plans. Since the bill is now unlikely to move forward in the Senate, some suggest that the move by Democrats was merely a move to force Republicans to vote against lowering drug prices. Republican Rep. Greg Walden stated: “It didn’t have to be this way,” reports Politico. “But they’re just waiting to cut the TV ads,” Walden continued.

On Jun 12, 2019, S. 466, the Protecting Americans with Pre-existing Conditions Act of 2019 was introduced by Sen. Mark Warner (D-VA) and referred to the Senate Finance Committee.  The Protecting Americans with Preexisting Conditions Act would formally repeal the Trump Administration’s October guidance, halting the state-led expansion of health insurance plans which could discriminate or exclude coverage based on preexisting conditions.

Full text: https://www.govtrack.us/congress/bills/116/s466/text.

On May 7, 2019, H.R. 2536 was introduced by Rep. Bill Flores (R-TX) and referred to theHouse Appropriations, Education and Labor, and 7 other committees. The bill would repeal the Patient Protection and Affordable Care Act and health care-related provisions in the Health Care and Education Reconciliation Act of 2010.

Full text: https://www.govtrack.us/congress/bills/116/hr2536/text.

On April 3, 2019, H.R. 2073 was introduced by Rep. Katie Porter (D-CA) and referred to the House Ways and Means Committee. This bill makes permanent the reduction in the adjusted gross income threshold that must be exceeded before a taxpayer is allowed to claim an itemized tax deduction for medical expenses. (In 2017, the threshold was temporarily reduced from 10% to 7.5% for 2017 and 2018.

Full text: https://www.govtrack.us/congress/bills/116/hr2073/text.

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