Health Headlines – September 11, 2023

House Committees Introduce Legislation Aimed at Improving Price Transparency and Lowering Health Care Costs for Patients – On September 8, 2023, Members of the House Energy and Commerce Committee, the Ways and Means Committee, and the Committee on Education and the Workforce introduced a health care package titled the Lower Costs, More Transparency Act (the LCMTA or the Proposed Bill).  The Proposed Bill would require hospitals, clinical labs, imaging service providers, ambulatory surgery centers, and pharmacy benefit managers (PBMs) to meet new price transparency requirements, including publishing pricing for shoppable services to be made available to consumers.  The Proposed Bill would also prohibit PBMs who contract with Medicaid managed care organizations from using spread pricing, and it would extend funding for Community Health Centers through 2025. 

The LCMTA is divided into four titles: Title I – Improving Healthcare Transparency; Title II – Reducing Health Care Costs for Patients; Title III – Supporting Patients, Health Care Workers, Community Health Centers, and Hospitals; and Title IV – Increasing Access to Quality Health Data and Lowering Hidden Fees.  Key provisions from each title are summarized below. 

I. Improving Healthcare Transparency

• Hospital Pricing – The LCMTA would require hospitals to publish all standard charges for at least 300 shoppable items and services. The charges would be published through machine-readable files and would have to include payor-specific negotiated charges, as well as charges for cash-paying patients. 
• Clinical Diagnostic Lab Tests – Labs would be required to publish the cash price and de-identified minimum and maximum insurer-negotiated rates for clinical diagnostic lab tests. The LCMTA applies this requirement to labs whose tests are included on the list of shoppable services that CMS specifies. 
• Imaging Price Transparency – The LCMTA would require imaging services providers to make public the cash prices and de-identified minimum and maximum insurer-negotiated rates for certain services.
• Ambulatory Surgery Centers (ASCs) – The Proposed Bill would require ASCs, when owned by a hospital, to make public insurer-negotiated rates and cash prices for all items and services, as well as prices for about 300 shoppable services.
• Pharmacy Benefit Managers – The Proposed Bill would require PBMs to provide employers detailed data on the acquisition cost of drugs, total out-of-pocket spending, aggregate rebate information, and the rationale for formulary placements. PBMs would be required to provide this data semi-annually.
• Reporting Requirements – Medicare Advantage organizations would be required to report to HHS information about PBMs, pharmacies, and other health care providers when they share common ownership.

II. Reducing Health Care Costs for Patients

• Generic Drug Applications – The LCMTA would require the FDA to disclose to new generic drug applicants what ingredients make a drug different from the listed brand when establishing sameness in formulation. When there are quantitative differences in an ingredient, the Proposed Bill would require the FDA to give specific guidance to establish sameness.
• Spread Pricing – The Proposed Bill would prohibit PBMs that contract with Medicaid managed care organizations from using spread pricing. Spread pricing occurs when PBMs reimburse pharmacies at a lower rate than the rate at which a health plan pays them, thus enabling the PBM to retain the “spread.” Instead of spread pricing, the LCMTA provides that states should pay PBMs an administrative fee when managing the drug benefit for Medicaid beneficiaries.  Pharmacies would also be required to report the actual acquisition cost of drugs.
• Equal Payment in Hospital Outpatient Departments and Physician Offices – The Proposed Bill would mandate equal payment for drugs administered to Medicare and Medicare beneficiaries both when administered in physician offices and in off-campus hospital out-patient departments.

III. Supporting Patients, Health Care Workers, Community Health Centers, and Hospitals

• Community Health Centers – The Proposed Bill would extend funding for Community Health Centers through calendar year 2025. The proposed funding is $4.4 billion per year. 
• Teaching Health Center Graduate Medical Education Program – The LCMTA would also fund the Teaching Health Center Graduate Medical Education Program through FY 2023, starting at $175 million in FY 2024 and increasing to $300 million in FY 2028, FY 2029, and FY 2030.
• Delaying Disproportionate Share Hospital (DSH) Payment Reductions under Medicaid – The Proposed Bill would eliminate proposed cuts of $8 billion per year in DSH payments for FY 2024 – FY 2025.
• Medicaid Improvement Fund – The Proposed Bill would eliminate $7 billion in funding for the Medicaid Improvement Fund.

IV. Increasing Access to Quality Health Data and Lowering Hidden Fees

• Health Data and Hidden Fees – The Proposed Bill would enhance requirements for PBMs and third-party administrators to disclose compensation to plan fiduciaries; it would also reiterate that existing law bans private health plans from preventing pharmacists from communicating to patients lower-cost drug options.

The LCMTA was assembled by the Republican chairs of the Energy and Commerce, Ways and Means, and Education and the Workforce Committees.  The Proposed Bill has bipartisan support: the Democratic ranking member of the Energy and Commerce Committee endorsed the bill, which draws substantially from H.R. 3561, the PATIENT Act, bipartisan legislation approved by the Committee unanimously in May.  The full House may vote on the LCMTA as soon as this month. 

A copy of the Proposed Bill is available here and a section-by-section summary is available here.

Reporter, Doug Comin, Atlanta, +1 404 572 3525, dcomin@kslaw.com.

CMS Issues Proposed Rule on Minimum Staffing Requirements for Long-Term Care Facilities – On September 1, 2023, CMS issued the Minimum Staffing Standards for Long-Term Care (LTC) Facilities and Medicaid Institutional Payment Transparency Reporting proposed rule (the Proposed Rule), which imposes nurse staffing requirements in LTC facilities participating in Medicare or Medicaid.  These rules are intended to improve the quality of care furnished to LTC facility residents.

The Proposed Rule consists of three core staffing proposals:

1. Three years after the publication date of the final rule (five years for rural facilities), facilities would need to meet minimum nurse staffing standards of 0.55 and 2.45 hours per resident per day by registered nurses (RNs) and nurse aides (NAs), respectively.
2. Two years after the publication date of the final rule (three years for rural facilities), facilities would be required to staff an RN onsite 24 hours a day, seven days a week.
3. Sixty days after the publication date of the final rule, facilities would need to comply with enhanced facility assessment requirements. Enhanced facility assessment requirements include, among other things, the use of: (i) evidence-based methods when care planning for residents; and (ii) the facility assessment to assess the specific needs for each resident unit in the facility and develop and maintain a staffing plan to maximize recruitment and retention of nursing staff.

CMS estimates that approximately 75 percent of LTC facilities would need to increase staffing to comply with the proposed staffing requirements. The Proposed Rule includes possible one-year hardship exemptions if the facility meets certain criteria, such as workforce unavailability, facility location, showing good faith efforts to hire and retain staff, and demonstrating a financial commitment to staffing through documentation of staffing expenditures relative to revenue. If implemented, facilities that fail to comply with the proposed requirements would be subject to enforcement actions, including termination of Medicare or Medicaid provider agreements, denial of Medicare or Medicaid payments, and civil monetary penalties.

Also, in the interest of promoting public transparency, CMS is proposing that states publicly report the percentage of Medicaid payments for services in nursing facilities and intermediate care facilities for individuals with intellectual disabilities that are spent compensating direct care workers and support staff.

Interested parties may submit a comment by November 6, 2023. The Proposed Rule is available here and the fact sheet is available here.

Reporter, Dennis Mkrtchian, Los Angeles, + 1 213 218 4046, dmkrtchian@kslaw.com.