Keenan Blog

“Lower Health Care Costs Act” Proposes Consumer Reforms

May 30, 2019

Congress has not enacted significant health care legislation since the Affordable Care Act (ACA), nine years ago. Last week, Senators Patty Murray (D-WA) and Lamar Alexander (R-TN) released draft legislation proposing the largest federal overhaul of the health insurance market since the ACA. This proposal by the chair and ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee is notable for its focus on areas where there is bipartisan consensus.

The “Lower Health Care Costs Act” is a draft bill that has not yet been formally introduced in Congress but contains novel approaches to address systemic issues that create excessive and unexpected costs for health care consumers. The proposal contains five sections addressing surprise medical billing, prescription drug pricing, transparency, public health, and health information.

The section on medical billing would require that emergency charges to a patient are counted toward the patient’s in-network deductible, hold patients harmless from surprise medical bills, and bar balance billing for more than the in-network cost-sharing amount for emergency care. Once patients are stable, they would have to be given advance notice of out-of-network care, an estimate of out-of-network costs and referrals for in-network care. Plans and providers would be responsible for resolving network contracting and reimbursement disputes, thus relieving patients and their families from dealing with factors they have no control over.

The section on prescription drugs focuses on pricing and access to biological and generic drugs. Regarding biologics, the bill streamlines the approval process for biosimilar and interchangeable products, and provides more publicly available information about biological products, biosimilars and interchangeable products.

The bill contains several provisions aimed at clearing some of the roadblocks that delay approval of generic drugs. Specifically, there would be limitations on exclusivity protections, curbs to abusive practices to delay generic approvals, and encourage development in areas no longer under patent protection.

The transparency section of the bill contains a sweeping series of provisions that would govern plans, providers, Pharmacy Benefit Managers (PBMs) and health benefit brokers and consultants. The bill would impose new restrictions on the contracts between providers and health plans, including bans on types of contract provisions that inhibit data exchange, consumer provider quality information, cost saving incentives, and prohibits contracts that impose terms on plan sponsors that they are not party to and can’t review.

The transparency section of the bill would also provide certain patient protections, requiring:

  • Plans to have up-do-date directories of their in-network providers, available to patients online or within 24 hours of an inquiry.
  • Patient responsibility only for the in-network cost-sharing amount if the patient received incorrect information from a carrier about a provider’s network status prior to a visit.
  • Providers and health plans to give patients good faith estimates of their expected out-of-pocket costs for specific health care services, and any other services that could reasonably be provided, within 48 hours of a request.
  • Health care facilities and providers to give patients a list of services received upon discharge and that all bills are sent to a patient within 30 business days and giving patients at least 30 business days to pay bills upon receipt.

PBMs would be prohibited from engaging in spread pricing, or charging a plan sponsor, health plan or patient more for a drug than the PBM paid to acquire the drug. It would require PBMs to pass on 100% of any rebates or discounts to the plan sponsor and plan sponsors would receive a quarterly report on the costs, fees, and rebate information associated with their PBM contracts.

Health benefit brokers and consultants would be required to disclose to plan sponsors and individual market enrollees any direct or indirect compensation they may receive for referral of services.

Additional provisions of the proposed bill designate a non-profit entity for improving cost transparency; require commercial health insurers to make claims, practitioner and out-of-pocket cost information readily available to patients; authorize resources to increase awareness of vaccines, improve maternal health outcomes; and fund anti-discrimination training for health care providers, among other initiatives.

The closer to the election of 2020, it’s less likely Congress will take any significant legislative action. Still, this bill indicates the trend of health care legislation, both federally and in some states. We will continue to track this legislation and provide updates as events warrant.

More details about this proposed legislation are provided in our recent Briefing.

About Amy Donovan
Amy is Keenan's Vice President of Legislative and Regulatory Affairs, authoring the firm's Briefings and position papers on legislation, regulation and litigation that have an impact on the firm and its clients.