House Bill Addresses Price Transparency, Site-Neutral Payment Policies

The US House of Representatives has passed a bill to improve healthcare price transparency and establish site-neutral payment policies for drug administration.

The Lower Costs, More Transparency Act would codify price transparency rules requiring hospitals to publish gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.

Hospitals would have to comply with these regulations by January 1, 2026, with states overseeing their compliance. The bill also extends the price transparency requirements to clinical laboratories, imaging service providers, and ambulatory surgical centers participating in Medicare.

The bill aims to enhance price transparency among pharmacy benefit managers (PBMs). Health plans offering group health insurance coverage and entities providing pharmacy benefits management services on behalf of plans must submit semiannual machine-readable reports to their health plan sponsors on the number and types of claims for covered drugs.

The report must include the drug’s brand name, chemical entity, and National Drug Code; if the drug was brand-name or generic; and where or how the drug was dispensed. The report must also indicate the net price per course of treatment or single fill, the total out-of-pocket spending by beneficiaries, the total net spending by the plan, and the total amount received or expected to be received by the plan in rebates or fees.

The legislation states that contracts with PBMs for employer-sponsored health plans must allow health plan fiduciaries to audit claims and cost information without undue restrictions.

In addition to stronger transparency measures, the bill addresses Medicaid and Medicare payment policies regarding PBMs and drug administration. For example, it would ban PBMs from spread pricing—when the cost to Medicaid exceeds what the PBM pays pharmacies for the drugs—and require pass-through pricing models.

The bill would also suspend the Medicaid disproportionate share hospital (DSH) payment reductions for two years. Instead of taking effect in 2024, they would take effect in 2026.

The legislation aims to achieve parity in Medicare payments for drugs administered at off-campus hospital outpatient departments. The policy would make these payments the same as those for drugs administered at other provider settings, such as physician offices. This site-neutral policy would result in Medicare reimbursement cuts for hospitals, sparking backlash from healthcare organizations.

Before the House passed the bill, the American Hospital Association (AHA) urged members to remove the site-neutral provisions.

“While the AHA appreciates inclusion of a two-year delay on DSH cuts, we have been very clear regarding the harm that would be done to our nation’s hospitals if so-called site-neutral cuts to Medicare were adopted,” Rick Pollack, president and CEO of AHA, said in a statement.

The Association of American Medical Colleges (AAMC) also expressed concern about the bill’s passage in the House, stating that the Medicare payment cuts would negatively impact patient access to care in rural and underserved communities.

“The AAMC strongly opposes so-called ‘site-neutral’ payment policies that are, in fact, simply cuts to hospitals. These policies disregard the fundamental differences between the patients cared for in hospital outpatient departments (HOPDs) and physician offices or ambulatory surgical centers,” David J Skorton, MD, president and CEO of AAMC and Danielle Turnipseed, JD, MHSA, MPP, said in a statement.

“Though this legislation would invest in key workforce programs and mitigate pending Medicaid Disproportionate Share Hospital (DSH) payment cuts, we oppose paying for these temporary provisions with permanent cuts to the Medicare program,” they added. “We urge the US Senate to oppose this legislation until harmful cuts to hospitals are removed from the bill.”

The House passed the bill with a 320 to 71 vote, but the Senate is not likely to take up the legislation.