Senate committee advances bill that would delay DSH cuts, rein in PBM tactics

The Senate Finance Committee on Nov. 8 voted to advance a healthcare package that would eliminate two years of Medicaid disproportionate share hospital cuts and rein in what Chairman Sen. Ron Wyden of Oregon called "shadowy tactics by pharmacy benefit managers." 

The legislation would eliminate the $8 billion per year Medicaid disproportionate hospital cuts for fiscal years for 2024 and 2025, according to a summary of the legislation from the Finance Committee.   

Medicaid Disproportionate Share Hospital cuts, part of the Affordable Care Act, were set to begin Oct. 1 but were delayed for the duration of a continuing resolution passed by Congress to fund the government through Nov. 17. Without action, funding would be cut by $8 billion in fiscal years 2024 through 2027 — a $32 billion reduction total.  

The legislation would also replace the statutory increase of the 1.25% increase for Medicare physician fee services furnished in 2024 with a 2.5% increase. Mr. Wyden said the goal is to shore up Medicare's effort in 2024 to boost payment for primary care and next year the committee will take a deeper look at Medicare physician payment as "several provisions in current law need to be re-examined."

As lawsuits pile up against pharmacy benefit managers — which act as the middlemen between payers and drugmakers to negotiate prices — and two federal investigations hang over the industry, the bill proposes creating an "essential retail pharmacies" designation. Eligible pharmacies for the new term would include those not affiliated with a PBM or a payer, or a pharmacy serving a "medically underserved area," the bill says. If approved, the policy would mandate insurance companies with a preferred pharmacy network to contract with the essential retail pharmacies. By 2028, 80% of their service areas would have to be covered by an independent community pharmacy, and 50% of their service areas would have to be covered by all other essential pharmacies. 

In an effort to quell rising drug costs, the bill seeks to gain insight into medication prices among non-retail pharmacies, which do not include pharmacies in hospitals, nursing homes or clinics. 

Another provision is directed at lowering drug costs for older adults through requiring post-deductible enrollee coinsurance for some eligible drugs, including anti-inflammatories and cardiovascular therapies, to be based on net prices instead of Part D negotiated prices.

The bill now heads to the full Senate for consideration. 

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