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Senate votes to reform PBMs again, stop $16B in hospital cuts

A slew of wide-ranging provision were approved by the Senate Finance Committee Wednesday, another step in the right direction for bipartisan members of Congress looking to reform pharmacy benefit managers.

The legislative spotlight was put back on pharmacy benefit manager reform and mental health in a comprehensive draft package presented by the Senate Finance Committee, which was passed Wednesday 26-0.

The act, called the Better Mental Health Care, Lower-Cost Drugs, and Extenders Act, when included with provisions from the Modernizing and Ensuring PBM Accountability (MEPA) Act from earlier this year, would introduce more transparency and regulation surrounding PBMs. Pharmacies would be required to report costs for medications.

Chair Ron Wyden, D-Oregon, and ranking member Mike Crapo, R-Idaho, said leading up to the hearing that the proposal will expand the number of mental health providers participating in Medicare in rural and underserved areas, improve access to mental health telehealth services and mental health care for children in Medicaid and the Children’s Health Insurance Program and require Medicare Advantage plans to maintain accurate provider directories while protecting enrollees from out-of-pocket costs.

It is also designed to stop seniors from paying higher copays, increase access to biosimilar medicines under Part D and extend federal provisions set to expire this year for hospitals and rural providers.

“This comprehensive legislation will reduce out-of-pocket medication costs for seniors, enhance accountability in our federal health care programs, improve access to high-quality mental health services, and extend critical support for clinicians and suppliers,” said Crapo in a statement. “I thank Senator Wyden and every member of the Committee for their partnership in this effort, and look forward to advancing this comprehensive, deficit-cutting, bipartisan legislation.”

Under the committee's proposal, the $8 billion in cuts to hospitals through the Medicaid disproportionate share hospital payments will be eliminated, saving providers $16 billion over the next two years, according to the mark (PDF) released earlier this week.

“Hopefully in further discussion Senators will decide not to pursue so-called ‘site neutral’ policies,” said Federation of American Hospitals President and CEO Chip Kahn in a statement. “This is no time for hospital cuts—particularly for struggling hospitals serving rural America. This ‘one-size-fits-all’ policy will ultimately threaten service resulting in limits on access to care for seniors and others who are better served receiving necessary treatment in the hospital. “

The draft also includes decreasing physician reimbursements by 1.25%, a reduction from larger cuts that could better appease physician interest groups.

PBM reform has garnered bipartisan support in recent months, with members on both sides of the aisle expressing disapproval of its tactics and role within the healthcare industry. In July, the committee voted 26-1 to pass the MEPA Act. That proposed bill was introduced in September and has been supported by health plan and pharmacy associations.

Three House committees also proposed PBM reform within the Lower Costs, More Transparency Act, a sign there is widespread support for remolding how PBMs operate. Progress on that proposal has stalled ever since Republican infighting left the chamber without a Speaker of the House for nearly three weeks.

Unions, like the International Brotherhood of Electrical Workers and the International Brotherhood of Teamsters, are wary of PBM proposals they’ve seen floating around. While they support PBM reform, they are worried the plans will negatively impact the Employee Retirement Income Security Act and employer health plans, reports Axios.

“As PBM-insurers have manipulated the system to become increasingly powerful and increasingly flush with cash, pharmacy teams, pharmacies and patients have been struggling,” said Anne Cassity, National Community Pharmacists Association senior vice president of government affairs. “For consumers, they’re dealing with increased costs and delayed access to care as a result of PBM tactics, and for independent pharmacies, it’s harder to keep the doors open. States across the country have been working to rein in the middlemen, but federal reforms are badly needed too.”

“Make no mistake: Real PBM reform at the federal level must protect Americans on Medicare and Medicaid and their pharmacies,” said National Association of Chain Drug Stores President and CEO Steven Anderson in a statement. “We urge the U.S. Senate and House leadership to enact real PBM reform this year, so that the most vulnerable Americans maintain access to all pharmacies on which they rely.”

The Pharmaceutical Care Management Association said it hopes Congress will not follow through with Wednesday’s proposals. A spokesperson said in a statement that the delinking provision could destabilize the Part D program by financially benefiting pharma groups while increasing taxpayer costs without reducing drug prices.

TransparencyRx, a coalition of PBMs, said members in its association save an average of $20 per prescription, and they hope the proposals are combined with legislation out of the Senate HELP Committee in the coming weeks.

The Biosimilars Forum praised the discussion draft, saying the recommendation that requires Part D plans to offer discount biosimilars on formulary starting in 2026 is a “win for everyone.”

“These policies promote uptake, access and availability of lower-cost biosimilars within the Medicare Part D program,” said Biosimilars Forum Executive Director Juliana Reed in a statement to Fierce Healthcare. “Biosimilars are a commonsense bipartisan solution to skyrocketing prescription drug costs, and the Forum is looking forward to bringing the cost-savings promise of these treatments to reality.”

However, a provision that would stop patients for paying more for biosimilars than brand-name alternatives was not included in the package, Stat reported.

Accountable care organizations, through the proposal, could receive a 1.75% alternative payment model incentive payment for qualifying participants based on performance in 2024. Previously, ACOs were eligible for double the bonus, but those payments are set to expire.

“NAACOS was pleased to see the dialogue around value-based care and the need incentivize the value movement at today’s Senate Finance Committee markup,” said Clif Gaus, president and CEO of the National Association of ACOs, in a statement.

The budgetary impact on all of these provisions, and more, were analyzed (PDF) by the Congressional Bugdet Office.

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