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.
