Transparency: Washington’s healthcare plan
SEN. CHUCK GRASSLEY, the senior Iowa Republican and new chair of the Senate Finance Committee, last week issued a sharp warning to the pharmaceutical industry.
“There’s too much secrecy in this business,” he told reporters as he mulled prospects for legislative reforms just after the close of his panel’s first hearing in a series focusing on drug pricing.
This is now a common sentiment in Washington that applies to more than drugmakers, touching insurers and hospitals as well. Even with a Congress so divided that its most notable accomplishment to date is being part of the longest government shutdown in U.S. history, policy analysts and advocates are hoping healthcare costs and the mounting burden on patients can stir some action.
First bipartisan case in point: The Jan. 29 Senate Finance Committee hearing ran at the exact same time as a similarly themed attack on drug pricing in the House by Democratic Rep. Elijah Cummings of Maryland. Cummings, a vocal critic of Big Pharma, is making drug pricing scrutiny a key part of his tenure as chair of the House Oversight and Reform Committee.
Another bipartisan case in point: Sen. Maggie Hassan (D-N.H.) Jan. 31 announced her guest for the Feb. 5 State of the Union will be a constituent who was hit with a $1,650 surprise bill after a trip to an in-network emergency room.
Hassan’s invitation followed a White House roundtable where President Donald Trump hosted an array of patients who have been hit by high surprise medical bills.
“We’re going to stop all of it, and it’s very important to me,” Trump said during the event, which also included his top health policy advisers, including HHS Secretary Alex Azar.
Hassan, as well as Sen. Bill Cassidy (RLa.), have been talking about legislative proposals to end the practice of surprise bills. Observers believe the political will is growing to actually get something done, especially since one of two powerhouse industries—either insurers or providers—will have to concede financial losses in order for something meaningful to pass. The question is: who?
“Even as opposing parties get closer on process, the hardest issue remains: What is the reference point for determining reasonableness of an out-of-network rate?” said Michael Adelberg, a consultant with law firm Faegre Baker Daniels who works on the issue. “On this topic, one side will win and one side will lose.”
The issue plays into the transparency debate because the true cost of healthcare is at the forefront of how to solve what everyone agrees is a crushing problem for patients. Since lawmakers plan to take the patient out of the middle of the insurer-provider fight, they’ll have to figure out a rate both sides can accept.
“My biggest hope is that senators stay strong and resist the games of the industry,” said Claire McAndrew, a policy ana- lyst for the Washington advocacy group Families USA, in reference to legislation on surprise billing. She is working closely with policy shops on the issue. “I do think compromise is possible and that Congress will be able to address this problem if they keep working and demand that industry comes to the table.”
As an opening salvo in the push for transparency, the hospital industry this year had to start complying with the new government mandate to publish their retail charges for various services.
But the rollout of the Trump administration policy has been messy and skeptics say there’s a long way to go before it will change much, if anything, for patients, particularly since the parameters HHS set for hospitals were loose. The department only required that hospitals publish their chargemaster prices in a “machine-readable” format.
“Machine readability is great for aggregating information from disaggregated sources like U.S. hospitals,” Adelberg said. “But if each hospital chargemaster list is idiosyncratic, then machine readability is useless.”
Benedic Ippolito, a research fellow at the American Enterprise Institute, rated that policy as “probably the least useful” of all the transparency efforts. He pointed to the example of California, which
“Even as opposing parties get closer on process, the hardest issue remains: What is the reference point for determining reasonableness of an out-of-network rate?”
Michael Adelberg Consultant Faegre Baker Daniels
has deployed a similar mandate for years but where hospitals charge some of the highest prices in the country.
Ippolito argued that it would be more productive for the government to disclose the frequency with which a hospital or physician hits a patient with a surprise bill, tying the conversation with the costs people actually face in their everyday lives.
This idea also ties into an effort state legislatures have undertaken in the past few years to push price transparency for insurance companies, which is also starting to become part of the conversation in the nation’s capital.
The policy, colloquially known as “Right to Shop,” has three components as laid out by the conservative Foundation for Government Accountability. Various combinations of the components have been adopted by a couple of insurers and in a few states, including Arizona and Maine, and one bill is currently moving through the Virginia Legislature.
Under the policy, a person seeking a particular procedure depends on their insurer to give an estimate ahead of time for the costs at all the various in-network options. If the patient chooses one of the less-expensive options, the person gets to share in the savings of the insurance plan.
The policy also has an out-of-network component, tying into the surprise-billing issue. If a patient finds an out-ofnetwork provider that can perform a procedure for a lower cash price than the in-network co-pay, the patient can opt for that and still get credit toward his or her insurance deductible.
Josh Archambault, senior fellow at the Foundation for Government Accountability, said insurers have tended to talk out of both sides of their mouth on the issue.
“Insurers understandably have taken a position, drawn a strong line in the sand that you can’t tell us what to do,” he said.
Add to that the Affordable Care Act’s medical-loss ratio provision, which led to insurers worrying whether shared savings would count as administrative costs and thus come out of their bottom line. So far however,
the states that are pushing this
kind of legislation have been explicit that shared savings go toward an insurer’s medical spending.
Ippolito said this kind of policy could feed into the conversation over surprise billing.
“I could imagine a situation where you have to be able to list the network status and/or cost of the healthcare professionals who will be involved,” he said. “You could make the hospital let the patients know who will be there and what the costs would be. That could have a meaningful effect. You make the hospital tell you that a service will be out-of-network and expensive, and you have the potential to say, ‘What the hell?’ ”
It’s unclear whether the talk about this policy on the federal level will translate into action, but Archambault noted several places the executive branch could launch the policy: federal employees and retirees, and also in Medicare where patients could see the cost variation between inpatient hospitals and ambulatory centers, for instance. After all, HHS last year finally pushed through a long-controversial site-neutral payment policy in an effort to bring hospital outpatient and physician payments more in line with one another. The administration could also deploy the policy for the ACA exchanges where subsidies are involved, and Labor Department regulations for self-insured employer plans.
But the biggest drive right now is on drug pricing transparency, leading off this Congress with the most hoopla as evidenced by the House and Senate hearings. And on Jan. 31, HHS proposed a rule that would dispel a safe harbor for pharmacy benefit manager rebates in Medicare Part D (See related story, p. 2).
“I think of the drug pricing issue in the way we used to think about hospitals,” Ippolito said, noting that the biggest swath of the market has remained obscured amid the layers of the commercial insurance market. In this black box, there’s little data on actual net drug prices.
“Think about what we knew about hospitals 10 to 15 years ago,” he said. “We knew what Medicare paid and that was it. Now we know things about the price ceiling we never knew, and we know things about the effects of concentration. That’s the kind of information we want to know more in the drug space.”
In the House hearing last week, Rep. Peter Welch (D-Vt.), a longtime pharma critic and advocate for reform, laid out areas where Republicans and Democrats agree, largely on the hidden pathways that patients need to navigate.
“The market has been exploited,” Welch said. And it’s the same concern that rankles Grassley.
“Think in terms of, the same thing 30 years ago or 40 years ago, when no one knew what they were going to be charged for a car,” Grassley said. “We all now have a level playing field on what you’re going to pay for a new Cadillac.”
Similarly, the senator added, drug pricing shouldn’t be a big secret to the biggest single purchaser of medicines in the world.
“And it shouldn’t be a big secret to the taxpayer,” he said. “After all, the taxpayers are paying for Medicare and Medicaid.”