Six Healthcare Policy Reforms to Watch
With 2023 around the corner, many benefits leaders are bracing for more healthcare policy reforms concerning pricing, transparency and state-level regulation.
The midterm elections made it clear that healthcare remains top-of-mind for many voters and legislators. Voters named healthcare and abortion as two of the country’s top five most important issues, and there is bipartisan support for many regulations that would expand access to care and curb costs. A divided Congress may find common ground on some of voters’ top healthcare priorities, but gridlock will undoubtedly impact other issues.
The issue of transparency will continue to serve as a cornerstone for reducing healthcare costs, as both parties have signaled a commitment to pursue more stringent price transparency requirements.
Pharmacy benefit manager (PBM) reforms will continue to be a priority at the federal level, in addition to a flurry of state activity (Iowa, Michigan, New York and Vermont.) In June, the Federal Trade Commission (FTC) announced the launch of an investigation into the six largest PBMs, requiring them to provide information and records regarding their business practices. The inquiry will scrutinize the competitive impact of PBMs, including their effects on prescription drug access and affordability. In October, Senator Chuck Grassley (R-Iowa) spearheaded a bipartisan letter to the FTC urging them to be swift in their investigation since PBMs’ potential anticompetitive practices could be increasing drug prices for consumers. Senators asked the FTC to issue a report on their findings, which may catalyze more decisive regulatory action.
Meanwhile, a push toward greater transparency in healthcare costs, including the passage of transformative federal legislation such as the No Surprises Act and Transparency in Coverage, is ongoing and expansive, with long-term implications for the pharmacy space. Making its debut on January 1, 2023, with 500 shoppable medical services and expanding to include prescription drugs in 2024, a new consumer-grade shoppable tool will help plan members understand the cost difference of their treatment and medication options so that they can make more informed decisions before they move forward with care.
Additionally, there is the “delayed until further notice” enforcement of the “machine-readable prescription drug file” that would publicly disclose the in-network negotiated rates and historical net prices for covered prescription drugs in individual and group health plans. Benefits compliance experts speculated that this provision would not go into effect because of the overlap with the Prescription Drug and Health Care Spending Reporting (RxDC) requirement under the Consolidated Appropriations Act (CAA). However, that is not a foregone conclusion.
The RxDC reports to CMS required by the CAA do not provide granular visibility to payers, employers and the public at large into what group health plans pay for prescription drugs like the other payer machine-readable files. Instead, a report published by the federal tri-agencies will be posted on the internet, with data aggregated to eliminate any individually identifiable or plan-specific information. The intent is for the reported data to help identify excessive drug pricing due to market concentration, promote generic drugs and address the cost impact of drug manufacturer rebates. The machine-readable file requirement for prescription drugs, therefore, is still on the table.
- Medicare Drug Prices
The implementation of Medicare drug price limits included in the Biden administration’s Inflation Reduction Act may spawn some of the biggest political battles. Consumers and purchaser advocates have expressed support for the regulations, but drug manufacturers will push to weaken the rules. The pharmaceutical industry had been hoping that a Republican-controlled Congress would help to change some provisions of the law. Now, it seems Republicans might “chip away” at the law, rather than spearhead any wholesale changes. In addition, with Democrats in control of the Senate, PBMs are concerned about heightened industry oversight coming from Congress and the Administration.
The commercial health plan market was excluded from the Act at the last minute. But its implementation will have far-reaching consequences that may impact future reforms. For example, there is concern these regulations will cause cost shifting to the commercial market. Some brokers say that this cost adjustment is already baked into the price negotiation process. The industry will have to wait and see how the Act’s key provisions take hold over the next six years of CMS’ implementation timeline.
- Reproductive Rights
Following the overturn of Roe v. Wade, reproductive rights were a crucial issue for many voters this fall. According to Kaiser Family Foundation (KFF), four in 10 voters across states with ballot measures said that the Supreme Court’s decision to overturn Roe v. Wade had a major impact on their decision to vote. In California, Michigan and Vermont, many voters endorsed womens’ right to choose. However, even in some conservative states, such as Kentucky and Montana, supporters of reproductive rights were victorious on ballot measures. Given the sensitivity of abortion and related treatment and access issues, employers will need to be prepared to navigate the potential polarity in employees’ views as well as changing laws in different states, especially concerning abortion travel benefits.
- State Efforts to Control Costs
States continue to signal an appetite to pursue policies to contain healthcare costs. Nine states have established healthcare cost commissions in recent years to address rising health spending and advance other priorities. Democratic officials have traditionally taken the lead on cost and market reforms, but bipartisan support is growing. These include prohibitions on anticompetitive practices, more vigorous oversight of mergers and acquisitions, and drug pricing reforms, similar to some federal priorities. Some actions taken by states this year include:
- In August, Ilinois Gov. JB Pritzker (D) signed a package of legislation to require pharmacies to provide customers with the retail price of a prescription drug before purchase and to limit the total monthly out-of-pocket costs for prescription drugs.
- HB 1276 was enacted in Georgia to require the Department of Community Health to report, at least bi-annually, certain specifics on state health plans, such as hospital utilization and cost (e.g., amounts paid per facility) and county-level provider data with indications on which counties fall below benchmarks for primary care. The bill was co-sponsored by representatives Lee Hawking (R) and Karen Bennett (D).
- Senator Nancy Barto (AZ-R) introduced SB 1088, which requires healthcare facilities with “more than 50 inpatient beds to make available upon request or online the direct pay price for at least the 50 most used diagnosis-related group [DRG] codes, if applicable, for the facility and at least the 50 most used outpatient service codes.” The bill was enacted and signed by the Governor in March.
- Oregon voters passed a ballot measure to officially enshrine healthcare as a right in the state’s constitution. It is the first state to do so. While the methodology remains unclear, the state will now be required to ensure that residents have access to affordable care. State lawmakers have said that new tax increases to provide that care are not off the table. Supporters of the measure insist that this is not a step toward single-payer healthcare, yet making healthcare a human right shifts the conversation in that direction.
- Telehealth Flexibility
The COVID-19 public health emergency (PHE) spurred regulatory waivers that allowed temporary flexibility in telehealth requirements, improving patient access, convenience and value. On March 15, 2022, President Biden signed legislation which restored the option of providing pre-deductible coverage of telehealth services for people with high-deductible health plans (HDHPs), including those that are linked to health savings accounts (HSAs). However, the March legislation did not make the pre-deductible coverage permanent, and it expires again at the end of December 2022.
New legislation has been introduced with bipartisan, bicameral support in Congress, so the employer community is hopeful that pre-deductible telehealth coverage can be made permanent. Notably, the vast majority of employer-sponsored HDHPs with HSAs have elected to cover telehealth services on a pre-deductible basis—83% of fully insured plans and 81% of self-insured plans, according to a study from America’s Health Insurance Plans (AHIP).
Additionally, the Telehealth Benefit Expansion for Workers Act of 2022 was introduced in the House. This bill aims to expand access to employer-sponsored health benefits by classifying telehealth as an excepted benefit. This would enable employers to offer standalone telehealth programs—like dental and vision plans—in addition to traditional medical health plans to non-full-time workers. It remains unclear how the end-of-year omnibus negotiations will unfold, but this is an issue to watch as it could get tucked in at the last minute.
- Mental Health Parity
On December 5, the Senate Finance Committee released language designed to improve the Mental Health Parity and Addiction Equity Act (Parity) enforcement. All aspects of the bill were bipartisan, making passage possible in the coming weeks.
The proposal would:
- Direct the Government Accountability Office to examine Medicaid payment rates for behavioral healthcare vs. rates for physical care and Medicare patient access to addiction treatment.
- Require Medicare to issue guidance to healthcare providers detailing options for patients needing substance use disorder treatment.
This proposal does not extend authority for the Department of Labor to impose fines on payers or self-funded employers that fail to comply with the law. However, DOL has explored this enforcement mechanism this year as has Congress. In addition, the House passed the Mental Health Matters Act this summer, which gives parity enforcement more teeth and notably includes a provision on PBM oversight.