Surprise billing, drug rebates among likely reforms this year, S&P Global says

By | April 23, 2019

Dive Brief:

  • Strong bipartisan support in Congress could spur passage of surprise billing legislation before the 2020 elections, a new S&P Global report predicts. President Donald Trump has promised to end the practice, and both Senate HELP Committee Chair Lamar Alexander, D-Tenn., and ranking minority member Patty Murray, D-Wash., have sent proposals to the Congressional Budget Office for scoring.
  • Also likely on the horizon are termination of drug rebates in the government market and Medicare Part D reforms, including use of previous authorizations and step-therapy.
  • Regarding calls for “Medicare for All” that have spooked the market in recent weeks, S&P says the industry shouldn’t sweat the impact yet. “We see almost no chance that these proposals will be implemented over the near term as there is little agreement among sponsors as to what form universal coverage should taken, and significant political opposition,” according to the report.

Dive Insight:

These and other reforms could affect ratings for different healthcare industry players, S&P Global warns.

Republican efforts to repeal the Affordable Care Act dominated Capitol Hill agendas in the first two years of the Trump administration. Those efforts ultimately failed, but not before GOP lawmakers weakened some provisions of the law. Meanwhile, a Texas federal court declared the entire ACA unconstitutional in December.

The report predicts further repeal efforts will stall, as the current Democrat-led House pushes a handful of bills to strengthen the weakened ACA. But those proposals have little chance of passing the Republican-held Senate, leaving the law’s future up in the air pending a July appeals hearing of the Texas case — a decision that will almost certainly end up in the U.S. Supreme Court.

With ACA repeal off the table, that opens the door for more practical healthcare reforms. Efforts to curb surprise billing — unexpected medical bills patients receive after being treated by out-of-network providers — have strong support on both sides of the aisle, and Alexander has alluded to potential legislation in the coming months. While such measures would be good news for patients, outsourced physician staffing companies, emergency air and ground medical service providers, and to a lesser extent hospitals could feel the pinch if surprise billing efforts succeed.

The report also points to a strong likelihood of rebate reform, thanks to an HHS proposed rule to eliminate current safe harbor protections for drug manufacturer rebates to pharmacy benefit managers in Medicare Part D and Medicaid managed care organizations. Instead, there would be a safe harbor allowing discounts for prescription drugs to be passed on to patients and another protecting some fixed-fee service arrangements between drugmakers and pharmacy benefit managers. If finalized as is, the rule would take effect Jan. 1.

Eliminating rebates in the government would have minimal effect on PBMs, the report says, since most pass those rebates on to the government plan sponsors. The bigger threat comes from killing rebates in the commercial market, according to S&P. Sen. Mike Braun, R-Ind., introduced a bill to end rebates in the commercial market, but passage is in no way assured.

The report also points to a handful of bills aimed at thwarting anticompetitive behavior by pharma companies and a change to Medicare Part B and Part D. The Part B reforms would link the price the government pays for drugs to an international pricing index and pay doctors who provide drugs under Part B according to a flat fee, rather than the current 104.3% of the average selling price.

Meanwhile, home health agencies are facing disruption under the CMS Patient-Driven Groupings Model, set to take effect Jan. 1, including a 6.4% prospective “behavioral adjustment,” according to the report.

Healthcare Dive – Latest News