In a significant move towards increased transparency and cost reduction in the healthcare sector, the U.S. House of Representatives voted 320-71 to pass the Lower Costs, More Transparency Act on December 11, 2023. The bipartisan legislation aims to address the pressing issue of rising healthcare costs by implementing crucial changes, particularly affecting employers sponsoring group health plans.
Transparency in Coverage Regulations
The bill codifies existing transparency in coverage regulations, requiring the posting of machine-readable files (MRF) and making certain cost information available. Notably, changes include specific timing for posting the MRF, scheduled for the 10th day of each month. If enacted, this provision would come into effect for the first plan year on or after January 1, 2026.
Pharmacy Benefit Managers (PBMs) Reporting
The Act mandates PBMs to provide semi-annual reports to group health plans, offering detailed data on prescription drug spending. This includes information on the acquisition cost of drugs, total out-of-pocket spending, formulary placement rationale, and aggregate rebate information. Failure to comply may result in penalties of $10,000 per day. If enacted, this provision would apply to the first plan year two years after the date of enactment.
Health Plan Fiduciary Transparency
To ensure health plan fiduciaries have access to critical information about their plans, the legislation enhances transparency requirements. Penalties for noncompliance may be assessed against Third Party Administrators (TPAs) and PBMs, amounting to $10,000 per day. This provision would become effective for the first plan year following the date of enactment.
Amendments to ERISA 408(b)(2) Compensation Disclosure
The Act proposes amendments to ERISA 408(b)(2) compensation disclosure requirements, directly including PBMs and TPAs as service providers obligated to disclose their compensation. If enacted, this change would apply to contracts entered into on or after January 1, 2025.
Prohibition of Gag Clauses in Pharmacy Contracts
Another notable provision prohibits gag clauses in pharmacy contracts that restrict pharmacies from disclosing cost information related to drugs to covered participants or beneficiaries. The effective date for this provision remains unclear.
While the House successfully passed this groundbreaking legislation, its fate in the Senate remains uncertain as a standalone piece of legislation. However, there is hope that components of this bill could find their way into government funding bills that both chambers will consider in early 2024. The legislative journey continues, and we will diligently monitor developments to keep you informed.
For those interested in delving deeper into the details, the full information can be found in the PDF on the originating website. Download PDF for more information.
Stay tuned for updates on this critical legislation that could reshape the landscape of healthcare transparency and affordability in the United States.
As always if you have any questions or concerns about this bulleting please contact your Medicare health insurance experts at Total Benefit Solutions, Inc (215)-355-2121