The Lower Costs, More Transparency Act: 9 things to know

The House could vote this week on The Lower Costs, More Transparency Act, which would require hospitals, ambulatory surgery centers, labs, imaging service providers and pharmacy benefit managers to meet new price transparency requirements, among several other provisions.

The proposed legislation, introduced Sept. 8., aims to improve price transparency and lower overall costs for patients and employers. The bipartisan bill, aims to empower patients to shop for their healthcare and make more informed decisions by providing them with accurate and timely information about the cost of procedures and services. 

"Hidden fees, dishonest billing, and other harmful practices in the healthcare industry have left patients in the dark about the cost of care," Rep. Virginia Foxx, chair of the House Education and the Workforce Committee, said in a news release. "No patient should be saddled with higher premiums just because he or she wasn’t presented with all of the facts. This good faith effort will allow patients to cut through the confusion in the healthcare marketplace and make informed decisions."

Nine things to know about the proposed bill: 

1. The legislation would require healthcare price information from hospitals, payers, labs, imaging providers and ASCs to publicly list the prices they charge patients.

2. Hospitals would be required 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 payer-specific negotiated charges in addition to charges for cash-paying patients.

3. Under the proposed legislation, ASCs, when owned by a hospital, would be required to make public insurer-negotiated rates and cash prices for all items and services, as well as prices for approximately 300 shoppable services. Site-neutral pay cuts would also be implemented for drug administration services provided in off-campus provider-based departments, according to the American Hospital Association. This would result in a cut of more than $3.7 billion over 10 years to hospital outpatient departments that provide essential drug administration services.

4. The proposed bill would also reduce costs for patients and employers by requiring payers and pharmacy benefit managers to disclose negotiated drug rebates and discounts, revealing the true costs of prescription drugs. PBMs that contract with Medicaid managed care organizations from using spread pricing, which 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," according to Jdsupra.com.

5. Medicare Advantage organizations would be required to report to HHS information about PBMs, pharmacies and other providers when they share common ownership.

6. The proposed bill would eliminate $8 billion a year in proposed disproportionate share hospital cuts during fiscal year 2024 through 2025 as well as $7 billion in funding for the Medicaid Improvement Fund.

7. The legislation would lower out-of-pocket costs for seniors who receive medication at a hospital owned facility or physician office and expand access to more affordable generic drugs.

8. Under the bill, employers would be equipped with the drug price information they need to get the best deal possible for their employees.

9. The proposed bill also fully pays for investments into programs that strengthen the healthcare system by: 

  • Funding community health centers, deemed crucial for patients in rural and underserved areas, would be extended through 2025. The proposed funding is $4.4 billion per year.
  • Supporting training programs for new physicians in communities.
  • Preserving Medicaid funding for hospitals that provide care to uninsured and low-income patients.
  • Extending funding for research to find better treatments and a cure for diabetes, which CMS said affects more than 38 million Americans.

"While the American Hospital Association 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," AHA President and CEO Rick Pollack said in a Dec. 11 statement. Rick Pollack. "We have strongly urged that those cuts be eliminated from this legislation. If Medicare site-neutral cuts remain part of this package, we ask that Congress oppose H.R. 5378 (The Lower Costs, More Transparency Act) until such changes are made."

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