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Today, Senator Lamar Alexander (R-TN) introduced bipartisan legislation from the Senate Health, Education, Labor, and Pensions (HELP) Committee that seeks to address surprise billing, lower drug costs, and improve health IT. The Lower Health Care Costs (LHCC) Act (S. 1895, section-by-section) contains over 30 proposals from Senators on both sides of the aisle. The Committee chose to use regional benchmarks as a mechanism for settling payment disputes in which, under the legislation, patients would be held harmless. The Committee also added several provisions to the legislation, including a clarification of conditions of use on biosimilar applications, a modernization of generic drug labeling, and protections against surprise bills resulting from air ambulance use.
· Background. This legislation was released in late May in discussion draft form for review by stakeholders. It included three options for addressing billing disputes between payers and providers: (1) network matching, (2) binding arbitration, and (3) rate benchmarks. The HELP Committee held a hearing yesterday, which has been summarized in the attached memo, to discuss feedback on the discussion draft. The bill's introduction comes as lawmakers in both chambers and on both sides of the aisle are working to end surprise billing and bring down drug costs, and the HELP Committee's legislation contains a number of reforms that lawmakers across Capitol Hill are eager to see implemented.
While Senator Alexander, who chairs the HELP Committee, expressed his preference for using "network matching" to address surprise bills, the legislation introduced today would implement a regional in-network median benchmark to settle surprise bills. Such a standard has been vigorously opposed by hospital advocates, and they can be expected to continue to fight its inclusion as the bill moves forward. In yesterday's hearing, Senator Alexander asserted that network matching would save the most money overall, however, the Congressional Budget Office (CBO) reportedly scored the regional benchmark plan, which the Committee ultimately adopted, as the biggest money-saver. However, the report has not yet been made public.
· What's next? The bill is scheduled for markup next Wednesday, June 26. Ultimately, the legislation may be packaged with forthcoming proposals from the Senate Finance Committee, which is expected to tackle issues such as an out-of-pocket cap in Part D, reforms to Part B drug payments, and pharmacy benefit manger (PBM) rebates. With lawmakers in both parties eager to produce results on surprise billing and drug pricing, any eventual package may be picked and chosen from the least controversial provisions of a number of proposals from House and Senate committees.
For the most part, the bill structurally remained the same, although some new provisions were added after the release of the discussion draft. Section 207, which deals with the exclusion of biologics from the United States Pharmacopeia compendial standards, was left largely unchanged. Similarly, Section 206, which provides for additional education for providers on biologics and biosimilars, was modified with clarifying language.
Notable new provisions include:
· Air Ambulances - In a first for legislation dealing with surprise billing, the legislation would extend patients-held-harmless protections to air ambulance services and applies a similar regional in-network benchmark approach for reconciling payment disputes between air ambulance providers and plans. Previous state efforts to end surprise billing were unable to touch air ambulances, as they are regulated as air carriers and are outside the jurisdiction of state governments.
· Generic Labeling - The legislation would give the Food and Drug Administration (FDA) authorities to update generic drug labeling that is no longer accurate due to the brand drug's having left the market. It would also allow the agency to require labeling changes to reflect new information about generic drugs.
· Biosimilar Conditions for Use - An added section would clarify the biosimilar submissions process to allow for the inclusion of information that shows that the proposed conditions for use have been previously approved for the reference product.
· Generics and Safety Information - Would give FDA the authority to include statements of safety in a generic's labeling even if the safety information is protected by a brand drug's exclusivity.
· Mental Health Parity - Would require health plans to analyze non-quantitative treatment limitations on medical and surgical benefits compared to mental health and substance use disorder benefits. The provision would give the Secretary of Labor the power to specify corrective action plans if the analyses show that plans are out of compliance with the mental health parity statute.
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