Congress Must Keep Its Promise to Lower Drug Costs for All Americans
October 26th, 2021
The Danger:
The reconciliation bill currently being debated in Congress would reduce future prescription drug costs for everyone in the United States. It does this by limiting how much drug makers can raise prices for medications that have no market competition. Some members of Congress seem to think only people on Medicare deserve lower drug costs and are working to eliminate price protections for working Americans younger than 65.
The reconciliation bill in its current form would save employers and Americans with private health insurance nearly $250 billion over 10 years.* But if Congress only applies cost savings to people on Medicare, 180 million Americans will get no relief from high drug prices, and may be left to pay even more.
The Drug Companies Told Us They’ll Raise Prices:
Economists continue to debate the extent to which drug makers would increase prices for working Americans to make up for the profits they’ll lose if drug prices are reduced only for Medicare and not private insurance — a practice called “cost-shifting.” But PhRMA already told us in formal comments to the Department of Health and Human Services drug manufacturers would likely increase prices in the commercial market:
“… Government experts found that proposals to extend Medicaid rebates to other government programs will likely increase Medicaid spending and negatively affect other drug payers, such as employers in the commercial market.”
A Call for Congress:
Congressional leaders have made public promises to bring down prescription drug costs for all Americans. They need to keep those promises. Any drug price legislation must protect working people and their families, not just those with Medicare coverage. Americans with private insurance are already paying too much for their prescription drugs and need relief.
* EmployersRx estimate based on analysis by Council for Informed Drug Spending Analysis, with inflation caps based on drug prices in 2021.
cidsa.org/publications/federal-revenue-generated-by-extending-drug-price-inflation-caps-to-the-commercial-market
About EmployersRx:
The Employers’ Prescription for Affordable Drugs (EmployersRx) is a coalition of the Purchaser Business Group on Health, National Alliance of Healthcare Purchaser Coalitions, The Erisa Industry Committee (ERIC), American Benefits Council, Silicon Valley Employers Forum and HR Policy Association. EmployersRx supports public policies that drive down the cost of drugs while preserving true innovation as part of a value-based health care system. Learn more at EmployersRx.org.
Seeing Through Pharma’s “Free Market” Façade
October 26th, 2021
Throughout this year’s drug pricing debate – and for many years before – the brand-name pharmaceutical industry has resisted public policy efforts to reduce their sky-high prices by arguing any intervention is a violation of the free market.
It is a seductive argument, because it successfully puts drug manufacturers on the “right” side of a core value for most people in our country. A 2015 poll by the libertarian magazine Reason found that nearly seven-in-ten Americans say they have a net favorable view of a free-market economy. Less than one-third report having a favorable view of a “government managed economy.”
PBGH represents nearly forty of the largest employers and health purchaser organizations in the country, including many Fortune 500 companies. It should come as no surprise, then, that we tend to agree with the American public. We support free markets and, whenever possible, try to find free-market solutions to health care problems.
Here’s the problem with the drug industry’s top talking point: It’s a lie. The fact is, the pricing system that the drug industry is trying to defend isn’t a free market. Heck, it isn’t even a market. It is, in fact, a government-sponsored monopoly.
Government policy has deliberately sanctioned prescription drug monopolies, which have then been exploited by drug manufacturers to charge outrageously high prices. For brand-name drugs, a drug company’s monopoly is granted by the government for a specified period through patents by the Patent and Trademark Office and market exclusivity through the Food and Drug Administration. Granting drugmakers a time-limited monopoly represents a conscious trade-off by policy makers. In effect, the government seeks to give drug makers a financial reward for innovation while protecting consumers in the long run by allowing generic competition after the expiration of the patent and market exclusivity.
Unfortunately, this delicate balance has been badly abused by the drug industry. This is where the drug industry’s “free market” façade becomes a cruel joke. Instead of allowing the free market to come into play when their drugs’ patents and market-exclusivity periods expire, drug companies instead devote enormous energy to maintaining their monopolies through any number of anti-competitive schemes, including “patent thickets” (holding dozens of patents on a single product, thereby deterring competition), “patent evergreening” (making minor changes to formulations, delivery mechanisms, etc. to stave off competition), “product hopping” (forcing patients to switch to “new” formulations of older products with new patents before a generic manufacturer can introduce a competitor to the older product), and “pay for delay” schemes (brand name drug makers paying generic manufacturers not to introduce a competing product).
One would think that an industry that claims to support free-market competition would agree to stop these objectively anti-competitive practices. Instead, the drug industry has time and again worked to stop policies that would enable a free market to thrive.
This year, Congress is considering major legislation to allow Medicare to negotiate the price of drugs that face no competition (i.e., those with a government-sponsored monopoly) and limit price growth on those drugs on behalf of all Americans.
That last clause is critical to PBGH and our members. As we said above, we prefer market-based solutions to health care problems and have long supported bills that would stop patent abuses and lead to more competition for prescription drugs. But if Congress is going to enact policies to directly bring down the price of drugs with no competition, it is absolutely vital that everyone, including the roughly 180 million people who have health coverage in the private market, gain access to those lower prices. If government price negotiation is limited to just Medicare, we believe the bill will actually harm our member companies, their employees and their families, as drug companies will seek to make up for lost revenue to Medicare by raising prices on the rest of us.
It is no small irony that the drug industry is using talk of “free markets” to defend government-sponsored monopolies. We will continue to support the pro-market bills that stop drug company gaming of the patent system. And we hope that if the current drug bill is enacted, by taking away pharmaceutical manufacturers’ ability to engage in monopolistic pricing, the net result will be the thing that we all (claim to) believe in – a free market with more competition and lower prices for everyone.
Late Pressure to Change Surprise Billing Rules Could Derail Savings
June 2nd, 2021
An eleventh-hour bid by private equity companies, hospitals and other provider interests to alter the implementation guidelines of the No Surprises Act threatens to torpedo Congress’ objectives of protecting patients from exorbitant, surprise medical bills and constraining soaring health care costs.
Two of health care providers’ most prominent political allies recently signaled they’ll push to modify the rules surrounding the act’s centerpiece arbitration process in a way they assert will help ensure “fair and clear” dispute resolutions. But we believe the effort is simply an attempt to create a backdoor opportunity for physicians and hospitals to continue collecting high, out-of-network rates.
How the arbitration guidelines ultimately shake out will likely have a major bearing on whether the legislation succeeds in protecting patients from often unaffordable medical bills and reduces costs for large, self-insured employers. The rulemaking process must wrap up in December 2021, with the law scheduled to take effect in January 2022.
New Factors Must Be Considered Before Reaching a Price
As originally drafted, the No Surprises legislation stipulated that when determining a fair out-of-network price in instances where payers and providers cannot agree, arbitrators would concentrate on the median, in-network rate used by the health plan for a specific service. The intent was to keep rates paid for out-of-network services in line with those negotiated between health plans and in-network providers.
But late changes to the law added an array of new variables arbitrators must now take into account when determining an appropriate payment. These range from particulars about the episode of care and the providers’ level of training to the type of facility in which the services were provided.
Another conspicuous change stipulates what arbitrators cannot consider when calculating an equitable price: The late language actually bars them from taking into account rates paid by government payers, including Medicare and Medicaid—a move clearly designed to help preserve above-market prices.
Setting the Stage to Keep Medical Bills High
The more pressing concern, however, is that despite the act’s original intent of using median, in-network rates to settle out-of-network payment disputes, provider allies now assert these core benchmarks should impart no greater influence in setting a price than any of the other factors inserted late in the bill.
In an April 29 letter to regulators, Senators Maggie Hassan (D-NH) and Bill Cassidy, MD (R-LA) stated that giving each arbitration factor “equal weight and consideration” will help ensure that neither party has undue leverage in contract negotiations and will “allow for fair and clear determinations that reflect the specific circumstances of each dispute.”
But PBGH and other act supporters understand that requiring arbitrators to equally consider the full range of variables will effectively reduce the median, in-network rate to merely a baseline price, which can then be subjected to multiple upcharges or add-ons, depending on which of the other variables may be applicable.
What’s more, there’s no language in the legislation that ensures the new variables will cut both ways; that they could also be used to pull the price down below the market median. The upshot is that many of added variables already are reflected in payment codes, so considering them as part of arbitration is unnecessary and redundant.
PBGH and others see the attempt to alter the arbitration rules for what it is: A last-ditch gambit by provider interests—including private equity companies currently engaged in physician-practice buying sprees—to preserve the outsized profit-making potential out-of-network charges have long provided. As such, we’re actively communicating with regulators and political leaders to head off this end run and ensure implementation of the No Surprises Act aligns with the law’s intended and desperately needed cost-cutting objectives.
The Real Cost of Health Care: Hospitals Dragging Their Feet on Price Transparency
May 17th, 2021
This year’s landmark federal rule requiring the nation’s 6,000 hospitals to begin making pricing data available publicly was supposed to help consumers and purchasers shop more intelligently for health care services. But whether that’s actually occurring seems questionable.
According to news reports and PBGH’s own analysis, wide variation in how hospitals are presenting price information make provider-to-provider comparisons difficult. Worse yet, hundreds of hospitals have coded their price lists in ways that ensure the data is invisible to Internet search engines. The Wall Street Journal reported the practice is so widespread among both hospitals and payers that the Centers for Medicare and Medicaid Services (CMS) recently issued guidance prohibiting it.
Only 35% of hospitals complying
Then there are the hospitals that haven’t complied with the transparency rule at all, apparently willing to accept a $300-per-day financial penalty in lieu of publishing their price lists. A recent study in Health Affairs found that 65 out of 100 hospitals sampled were “unambiguously non-compliant.”
Among those that have posted prices, the numbers frequently have sparked more questions than answers. Case in point: Prices for caesarean sections provided by Sacramento-based Sutter Health varied by a factor of 10—from $6,241 to $60,584—depending on which Sutter facility did the procedure and/or which insurance company paid for it.
Hospitals point to COVID-19 challenges
The transparency final rule, which was initially published in December 2019, codified an executive order issued by President Trump the previous June that had identified hospital price transparency as a means of encouraging provider competition and reducing costs. The American Hospital Association (AHA) filed suit to block the rule’s implementation and sought an emergency stay, but a federal judge upheld the legality of the regulation in December 2020 and the law took effect on January 1.
The rule requires hospitals to post their entire list of standard charges, or chargemaster, along with discounted cash prices, payer-specific negotiated prices, and de-identified minimum and maximum negotiated charges. They also must publish pricing for 300 specific shoppable health services, 70 of which have been predefined by CMS.
Hospitals believe the Department of Health and Human Services (HHS) should exercise discretion in enforcing the rule, given the challenges facilities face due to COVID-19. Insurers, for their part, have argued that the rule will cost them vastly more than anticipated, require the sharing of trade secrets, and compel the disclosure of “staggering” volumes of data.
But key elected officials are not in a sympathetic mood. Bipartisan members of the House Committee on Energy & Commerce in mid-April urged the HHS to conduct vigorous oversight and enforce full compliance. They suggested the possibility of increasing the civil penalty amount and conducing regular hospital audits. Notably, the current penalty of $300 per day, or $109,500 annually, amounts to about 0.0033% of the average hospital’s net patient revenue of $334.5 million in 2018.
A vital tool for purchasers
The price transparency rule was primarily envisioned as a tool to help consumers make better purchasing decisions. But it will likely prove most valuable to health care purchasers and employers, assuming standardized, accurate pricing data eventually is available nationwide.
That’s because the lack of visibility into pricing historically has been a source of enormous frustration for employers. Without pricing or care quality information, purchasers are effectively flying blind when it comes to decisions about employee health benefits. This knowledge vacuum has been exacerbated by gag clauses and other tactics some providers have used to prevent payers from sharing price or quality information with purchasers.
Equipped with payer-specific discounts and the other details required by the rule, purchasers should be able to determine:
- How their contracted hospitals compare on price with other hospitals, both overall and on an item-specific basis
- Whether payers are charging self-insured employers more than fully insured customers
- Whether their third-party administrator (TPA) is securing the best available deal
Greater hospital transparency could also contribute to improved health plan and pharmacy benefit management pricing visibility.
A multi-pronged approach
As important as price transparency is, it represents only one tool for addressing the enormous problem of over-priced, variable-quality health care. New payment models that align Medicare and Medicaid with private sector purchasers are necessary to ensure that efficiency and quality are consistently prioritized across the system.
And while well-functioning markets continue to represent the best way to get lower prices and higher quality, policymakers need to revise marketplace rules to ensure that drug manufacturers, hospitals and physicians don’t use anti-competitive practices to gain market power and raise prices.
Finally, protecting patients from surprise medical billing must be a key priority. Certain physician groups, often backed by private equity firms, can’t be allowed to exploit their monopoly positions to extract high prices from health plans and self-insured employers.
Democrats Gamble on Two Budget Reconciliation Bills
February 17th, 2021
Faced with Republican resistance on the size and scope of their proposed COVID-19 response legislation, the $1.9 trillion American Rescue Plan, Capitol Hill Democrats are attempting to do something no Congress has succeeded in doing since 2006 – pass two budget reconciliation bills in a single year – a particularly difficult challenge given Democrats controlling both chambers by the narrowest of margins.
The budget reconciliation process is designed to expedite consideration and passage of certain types of legislation – namely, those that impact the federal budget deficit. Unlike most other legislation, budget reconciliation bills cannot be filibustered in the Senate, meaning they can pass with a simple majority. In general, this means that the party with the Senate majority can pass the legislation without relying on bipartisan support. The rules around passage of budget reconciliation legislation are complex, but most importantly, all of the bill’s provisions must directly impact federal spending, meaning many policies of interest are off the table.
Congress is already well on its way to passing the American Rescue Plan, which was considered by committees of jurisdiction last week and is expected to be passed by the House this week. The legislation includes several priorities identified in a PBGH-led letter signed by more than 25 employer / purchaser organizations, including increased funding for production and distribution of COVID tests, vaccines and personal protective equipment. In addition, the bill provides subsidies for laid off or furloughed employees to cover 85% of COBRA premiums. The Congressional Budget Office estimates that the COBRA subsidies will help provide continuous coverage for 2.2 million people. Unfortunately, the American Rescue Plan fails to address other priorities identified by employers and purchasers, including capping prices on vaccines, testing, PPE and COVID services, and policies to increase the availability of telehealth both during and after the pandemic.
Following expected House passage next week, the American Rescue Plan will likely be taken up immediately by the Senate and could pass in a matter of weeks. Congressional leaders have set March 14 as an unofficial deadline for enactment, as that is when current funding for enhanced unemployment insurance payments is set to expire.
Congressional Democrats will likely have a heavier lift passing their second reconciliation bill later this year. While the American Rescue Plan is focused on COVID response and relief and thus enjoys strong public support, the next bill will potentially incorporate many unrelated priorities, including health care policy, infrastructure spending and tax reform. It is as part of that bill that congressional leaders have said they will seek to move more controversial health care priorities, including new coverage options, such as expansion of Medicare or a public option, and policies to bring down drug costs by allowing Medicare to negotiate for the price of brand-name drugs and to cap inflation on existing drugs.
While reconciliation’s rules mean that Democrats could avoid having to negotiate with Republicans on these priorities, it would require unanimous support among all 50 Senate Democrats to be enacted – a difficult task under all circumstances.
Last-minute talks pushed surprise billing ban across finish line
January 22nd, 2021
Unlike their 2019 failure, lawmakers this year succeeded in sealing the deal by including language in the massive COVID relief and federal spending package that President Donald Trump signed into law on Dec. 27. The surprise billing ban takes effect in 2022.
Learn More: Modern Healthcare
2021 Health Policy Priorities: Bipartisanship the Only Path to Success
January 19th, 2021
Beginning on Jan. 20, Democrats will hold a “trifecta” – control of the White House, Senate and House of Representatives – for the first time since Barack Obama’s first term in 2009.
Democrats have signaled that they intend to pass major health care legislation this year. While health care legislation has been the flashpoint of major partisan battles in recent years – most notably the passage of the Affordable Care Act in 2010 and its attempted repeal in 2017 – there is a real window for bipartisan support on legislation focused on reducing health care costs and improving quality. Over the past decade, the rate of inflation for medical services has averaged nearly 3% annually – roughly twice the rate of inflation for all other products and services. Unsurprisingly, recent public polling demonstrates that lowering the cost of care for individuals is the most popular health policy among voters. As the largest purchasers of health care, large employers know well the impact of the relentless increase in health care costs on their businesses and on their employees.
Post-COVID 2021 Policy Priorities for Large Employers
Like policymakers, employers are focused right now on stemming and ultimately defeating COVID-19. Once the pandemic is largely over, they will look to policymakers to pivot quickly to directly tackle high health care costs, inadequate quality and stubborn inequity in health care. But that does not mean it will be easy. Truly addressing the underlying problems in our health care system means directly challenging entrenched interests that perpetuate the broken status quo. That’s why taking on these issues can and should be bipartisan in nature.
Large private employers and public health care purchasers will be watching the actions of the Biden administration and new Congress with special focus on the following issues:
1. Broken Health Care Markets
Our health care system is rife with economic distortions, including inadequate competition, opaque pricing, uninformed consumers and a lack of actionable measures of quality. Large employers are interested in the changes policymakers will make to strengthen competition and transparency. Where markets have failed entirely or where there is no market, federal policymakers have a responsibility to directly manage prices, with an emphasis on strengthening competition via:
- Stronger health care anti-trust enforcement, including prohibitions on anti-competitive practices, to address the problems of industry consolidation, market power and high prices.
- Price transparency at the individual, health plan and provider levels, including unveiling negotiated prices between providers and health plans.
- Policies to increase healthy price competition among brand name drugs, generics and biosimilars
In highly consolidated health care markets, where dominant health systems have already driven up prices, it may be impossible to reinstate healthy competition. This may be particularly true in rural areas with very limited numbers of hospitals and physicians. In such cases, the federal government should directly set or constrain prices for all purchasers at fair and reasonable levels.
For pharmaceuticals with no effective competition (including many brand-name drugs under patent and/or market competition) the federal government should negotiate fair and reasonable prices available to all payers, as well as institute caps on inflation for prescription drugs currently on the market.
2. Rapid Acceleration of Payment Reforms from Fee-For-Service to Value-Based Models
Policymakers have long recognized that the fee-for-service payment system promotes higher volumes of care without accountability for the quality of care or patient experience. It is time for leaders to insist on the rapid adoption of value-based payment models for both public and private payers.
Population-based payment models, as described in the Health Care Payment Learning and Action Network’s framework, are the best way to provide flexibility to physicians and health systems while ensuring accountability for the total cost of care. The payment models must also include accountability for quality, patient experience and equity.
In the wake of the pandemic and the rapid rise of and need for remote care options, it is important to note that population-based payment models provide the right incentives for the expanded and appropriate use of telehealth services.
3. Adoption of Robust Performance Measurement with Focus on Health Equity
The ability of our health care system to deliver higher quality outcomes depends on the adoption of standardized and mandatory performance measures. Such measures are essential to the widespread adoption of value-based payments.
Performance measures should include clinical outcomes, patient-reported outcomes, appropriateness and equity. And they should be standardized and required for all physicians, hospitals and other clinicians to provide useful comparable information to patients, consumers and purchasers.
For too long, however, health care quality measures have failed to address underlying racial, ethnic and other disparities in health care. Performance measures should include the capture of racial and ethnic identification data. Further, quality improvement initiatives should focus on areas of greatest disparities, such as maternal and infant care and COVID.
Each of the policies described has enjoyed bipartisan support in the past. With just 50 Senators caucusing with Democrats and a five-seat majority in the House, the most viable path toward legislative success rests on bipartisanship.
For more on what large employers are prioritizing in 2021, read 7 Large Employer Health Care Priorities to Watch in 2021.
5 Health Care Provisions in the COVID Relief Bill Impacting Employers and Families
December 21st, 2020
Over the weekend, congressional negotiators reached a deal on a more than $900 billion COVID-19 relief package. This legislation will be tied to a year-end government funding bill. Among the many provisions in the bill are several of particular interest for employers and health care purchasers.
Below is a summary of the critical items of interest:
1. Surprise Medical Bills
After a two-year legislative fight, Congress is poised to finally pass legislation to ban surprise medical bills.
Consumer protections: If a covered individual receives out-of-network care without their consent (whether in an emergency or non-emergency situation), the individual will only be expected to pay their normal in-network cost sharing amount.
Negotiation between providers, insurers: The remaining balance of the bill will be negotiated between the health insurer and the provider. The two parties will have 30 days to negotiate a mutually agreeable payment rate. If they fail to reach agreement after 30 days, either party may request an independent dispute resolution process (IDR). Under IDR:
- Both parties will submit a “best final offer” to an independent arbitrator.
- Both parties may submit additional information justifying their offer, but the arbitrator is banned from considering providers’ billed charges and the payment rate from public payers, including Medicare. Further, the arbitrator must consider the median in-network payment rate for the service in the geographic area.
- Using “baseball style” arbitration, the arbitrator must choose one of the two offers.
- The arbitrator’s decision is final. The losing party is responsible for payment of the IDR cost.
Most care settings affected: The surprise medical bill protections apply to inpatient hospitals settings and outpatient care in emergency departments, outpatient clinics and surgical centers and clinician offices. They also apply to air ambulance transport. Unfortunately, they do not apply to ground ambulance transport services.
2022 implementation: Protections against surprise bills will take effect for health plan years beginning on or after January 1, 2022.
Impact: The consumer protections included in the legislation will put an end to the scourge of surprise medical bills and reduce the ability of certain providers from driving up costs by implicitly threatening to bill patients if they are not included in insurance networks. However, there is concern that the IDR process may be “gamed” by providers and will be less successful at holding down costs for purchasers than the proposed alternative of a benchmark payment rate for surprise bills. Nevertheless, the Congressional Budget Office and other independent analysts believe that the legislation’s requirement that the arbitrator consider the median in-network payment amount will be effective at holding down costs.
2. Health Care Price Transparency
No more gag clauses: The final bill will ban “gag clauses” from health plan/provider contracts. These clauses prohibit plans from disclosing to plan sponsors and individuals’ financial information including the allowed amount and provider-specific negotiated payment amounts for items and services covered by the health plan.
Drug spending disclosures: The bill also requires annual disclosure by health plans regarding spending on prescription drugs, including the most frequently dispensed drugs, the highest cost drugs, the drugs with the fastest rising spending and the effect of drug rebates, fees and other renumeration plan premiums.
Impact: The ban on gag clauses in provider/plan contracts will provide meaningful, provider-specific information to plan sponsors and individuals regarding prices. However, Congress chose not to include accompanying legislation that would give plan sponsors the tools they need to use this information to stop dominant health care systems from engaging in anti-competitive behavior. This will, unfortunately, allow health systems to continue to drive up costs for purchasers and consumers without improving quality.
In addition, Congress chose not to include meaningful reform to the way in which health plans and pharmacy benefit managers (PBMs) purchase drugs. Previously considered legislation would have provided drug-specific price disclosures, discounts and rebates, and banned PBMs from engaging in “spread pricing,” in which the PBMs directly profit from rebates and discounts they negotiate rather than passing them onto plan sponsors. Instead, the final language in the bill provides only high-level aggregated information without a ban on spread pricing. It is unlikely the legislation will result in any change in behavior by PBMs and health plans.
3. Direct Economic Relief
Stimulus payments: Up to $600 per person in direct stimulus payments to individuals, phasing out for families with income exceeding $75,000.
Increased financial support: Enhanced unemployment insurance benefits of $300 per week for up to 11 weeks.
Help for small business: $240 billion for Paycheck Protection Program loans for small businesses, including non-profit organizations. Qualifying PPP recipients will need to demonstrate significant revenue losses in 2020.
Impact: The enhanced unemployment insurance and extension of the paycheck protection program will help struggling families and keep the economy afloat during the pandemic. However, Congress did NOT include COBRA subsidies for employees who have been laid off or furloughed – many of whom have joined the ranks of the uninsured since the pandemic began. These subsidies would have provided important financial support and medical continuity for families affected by job loss.
4. COVID Response
The bill provides additional fund for vaccines and COVID testing practices intended to help get the pandemic’s spread under control.
Vaccines: $20 billion for purchase of vaccine doses by the federal government; $8 billion for vaccine distribution
Testing: $20 billion for states to conduct testing and contact tracing
Provider relief: $20 billion in additional economic relief for health care providers.
Impact: The COVID response funding made available under this bill is critical to helping the country exit the pandemic as swiftly and effectively as possible – the necessary step to reinvigorating the economy.
5. Flexible Spending Account Rollover
The legislation allows flexibility for taxpayers to rollover unused amounts in their health and dependent care flexible spending arrangements (FSAs) from 2020 to 2021 and from 2021 to 2022. It also permits employers to allow employees to make a 2021 mid-year change in contribution amounts.
Impact: This provision gives employers and employees flexibility in managing unexpected changes in health care costs during the pandemic.
The New Political Landscape: 3 Opportunities for Employers to Shape Health Policy
November 6th, 2020
The outcome of the presidential race has ended with Joe Biden the new President-elect, and the potential of a split Congress. The new political landscape has significant implications for large employers and health care purchasers, PBGH policy experts explained in a members-only webinar the morning after the election, Nov. 4.
If Democrats and Republicans maintain control of the House and Senate, respectively, a continued partisan stalemate is likely. That means that major health policy changes are unlikely, according to Bill Kramer, PBGH’s executive director of Health Policy, and Shawn Gremminger, director of Health Policy.
Top Priorities for Large Employers
Opportunities nonetheless may emerge for legislative action. With a Biden win and Republican Senate – the most likely outcome given where the race currently stands – we see three areas of potential policy activity that could impact large corporations and the health benefits they extend to their employees:
1) Prescription drug costs: Employers are deeply concerned about high-priced drugs, and view this as a top issue. In fact, a poll taken during the post-election webinar found that 71% of employers feel that prescription drug pricing reform should be a top federal priority for 2021.
With a Biden administration and Republican-led Senate, it’s still possible that we’ll see movement on legislation improving transparency and even capping price increases. In addition, we could see limits on anti-competitive practices, such as pay-for-delay and other patent-related tactics, although they would face strong opposition from the pharmaceutical industry. These actions could lead to significant savings for large health care purchasers, and by extension, employees who receive health benefits on the job.
2) Surprise billing: This continues to be a serious problem, and there is bipartisan support to pass legislation to eliminate surprise billing. Congress has been deadlocked, however, on the best way to limit the prices charged by providers who have not signed a contract to be “in-network” with a health plan If we can find a way to break the stalemate and set limits using existing local, market-based contract rates, there would be real savings for employers and protections for patients.
3) High health care costs: High health benefit costs come at the expense of core business investments and hold down wages, dampen business growth and squeeze family budgets. The COVID pandemic and the related economic recession are making this growing crisis completely untenable as unemployment soars and many employers face existential threats.
Nearly 60% of employers who attended the PBGH post-election webinar said that policies to reduce health care costs beyond prescription drugs were a top priority heading into 2021.
Large employers would welcome action to accelerate the transition from fee-for-service to value-based payment models, which would help shift provider incentives from volume to quality and value. This could be accomplished by administrative action to introduce, test and spread value-based clinician payment and care models, especially for primary care.
In addition, health system consolidation has been a major driver of rising costs, and employers see a long-term benefit to stronger anti-trust enforcement and new prohibitions on anti-competitive practices, both of which are possible in the coming year.
Taking the Fight Against Rising Costs, Inequity Into Their Own Hands
Regardless of the ultimate makeup of the Senate, employers attending the PBGH post-election webinar identified several priorities they were likely to pursue on their own to stem rising health care costs, particularly in the wake of COVID.
Half (50%) said they planned to alter their company’s drug formularies to eliminate wasteful spending, and 44% said they intended to engage in value-based contracts to strengthen primary care. Another 50% indicated they would invest in methods to address inequities in care delivery and outcomes.
The days and weeks ahead will make clearer the configuration of our federal government post-election. We will have the opportunity to address the problems of high costs, inconsistent quality and racial disparities through administrative action as well as legislation, and the voice of employers will be an important influence in the upcoming health policy debates.
5 Political Sticking Points that Could Derail COVID Legislation
August 4th, 2020
The Senate is working to pass another major COVID-19 bill, and the details of that legislation are of great concern for large private employers and health care purchasers seeking to manage COVID-19 costs during the sharpest economic contraction since the Great Depression.
Five priorities of large employers were outlined in a previous post. While all of those priorities come with their own detractors and will not be easily won, they are not the most headline-grabbing flashpoints likely to derail the Phase 4 Legislation.
Here are the five biggest disagreements likely to cause heartburn for negotiators.
- Size and Scope: Before House, Senate, and Administration negotiators can begin to tackle individual policy priorities, they will need to come to some agreement on the overall size and scope of the legislation. The House Democrats’ HEROES Act comes in at $3 trillion – the most expensive bill ever to pass a chamber of Congress – and includes policies affecting the economy well beyond the COVID-19 pandemic. Senate Republicans have insisted on keeping the bill to under $1 trillion and ensuring all its provisions are directly related to the pandemic. The White House has not provided an overall budget target, but seems to favor more spending if necessary to improve the economy in advance of the November elections.
- Unemployment Insurance Extension: The CARES Act provided $600 per week in enhanced unemployment benefits to those laid off during the pandemic, but the benefits expired at the end of July. The HEROES Act extends the expanded unemployment benefits at $600 per week through the end of January 2021. The White House and congressional Republicans have grudgingly agreed to extend the program, but at a lower amount.
- Business Liability Protection: Senate Majority Leader Mitch McConnell (R-KY) has insisted that the legislation must include comprehensive liability protections for businesses, schools, and other entities against legal claims based on the spread of COVID-19. Democrats did not include such protections in the HEROES Act.
- State and Local Fiscal Relief: Conversely, House Democrats have pushed hard for substantial spending to help offset tax revenue decreases and COVID-related expense increases for states and localities, including more than $700 billion in such relief in the HEROES Act. Senate Republicans and the White House have shown little interest in such spending.
- Stimulus Checks: The CARES Act provided up to $1,200 per adult and $500 per child in direct stimulus checks to Americans. House Democrats propose another round of checks at the same amount, but congressional Republicans are less enthusiastic. The White House has signaled its support for another round of stimulus checks, noting their likely popularity in an election year.
The August recess is officially scheduled to begin on Aug. 8 – the end of this week. But with so many disagreements between the major players, this negotiation could well last until the middle of the month or even later.