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Column | Healthcare Reform

2020 will see healthcare policy mired in inaction

Column | Healthcare Reform

2020 will see healthcare policy mired in inaction


In the midst of the ongoing polarization of political views across the nation and crippling partisanship in Washington, D.C., the most substantive proposed health policy initiatives appear to be stuck in holding patterns for at least a year. 

Two areas where partisan roadblocks have prevented Congress from enacting solutions to the nation’s ongoing healthcare policy challenges are prescription drug costs and healthcare price transparency. Meanwhile, a Republican-led challenge to the Affordable Care Act (ACA) awaits a decision from the Supreme Court that leaves very much in question the fate of the legislation, with little chance of resolution in 2020.

Prescription drug costs

Although the American public has consistently rated the price of prescription drugs as one of their top concerns, Congress has been stymied in its efforts to address this issue legislatively.

Two bills, one from the House and one from the Senate, have bubbled to the top as partial solutions. 

The House bill, the Elijah E. Cummings Lower Drug Costs Now Act of 2019 (H.R.3), was passed in the House on Dec. 12, 2019. H.R.3 requires CMS to negotiate prices for certain drugs. The negotiated maximum price may not exceed 120% of the average price in six other specified industrialized countries or, if such information is not available, 85% of the U.S. average manufacturer price (AMP). 

The bill also requires drug manufacturers to reverse price hikes or issue rebates to CMS for covered drugs that cost $100 or more and for which the AMP increased faster than inflation since 2016.

The Senate bill, the Prescription Drug Pricing Reduction Act of 2019 (S. 2543), came out of the Senate Finance Committee with bipartisan support. Among many things, S. 2543 includes a cap of $3,100 for annual out-of-pocket drug costs for Medicare Part D participants, and it requires price concessions (rebates) from drug manufacturers payable to the federal government if drug prices (specifically, list prices in Medicare Part D and average sales prices in Medicare Part B) grow faster than inflation. 

Both bills face legislative roadblocks. Senate Majority Leader Mitch McConnell (R-Ky.) has pronounced H.R.3 dead in the Senate because of its more aggressive efforts to rein in drug prices. McConnell has been reluctant to move the bill to the floor of the Senate because some Senate Republicans oppose its penalties on drug-makers that levy above-inflation price hikes.

Hospital price transparency

The Trump administration has made transparency a repeated theme of several of its health reform pronouncements, positioning it as a consumer-empowering pathway to spur competition and reduce healthcare costs. 

After President Trump had issued two executive orders calling for price transparency — on Oct. 12, 2017, and June 24, 2019 — CMS on Nov. 15, 2019, issued a final rule that will require hospitals, beginning in 2021, to provide patients with clear, accessible information about their prices for the items and services they provide.a

Specifically, the rule states that hospitals must make public, on the internet, hospital standard charges for all items and services. Hospitals also must make public payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient for an item or service and the minimum and maximum negotiated charges for 300 common shoppable services, with updates on at least an annual basis.

In response, on Dec. 4, 2019, the American Hospital Association, the Association of American Medical Colleges, the Children’s Hospital Association and the Federation of American Hospitals challenged the contract disclosure rule by filing a lawsuit against the U.S. Department of Health and Human Services (HHS) in the U.S. District Court for the District of Columbia.b

The hospital organizations object to the rule’s provision that mandates public disclosure of individually negotiated rates between commercial health insurers and hospitals. The lawsuit asks the court to block the implementation of the rule, contending that HHS lacks statutory authority to require and enforce this provision.

The lawsuit also argues that the provision violates the First Amendment by forcing the public disclosure of individual rates, negotiated between hospitals and insurers, in a manner that will confuse patients and unduly burden hospitals.

Given the high stakes for hospitals and the Trump administration, regardless how the district court rules, an appeal of the decision is almost certain, making resolution of this issue highly unlikely in 2020. 

The ACA (and beyond) 

Because the Tax Cuts and Jobs Act of 2017  zeroed out the ACA’s individual mandate penalty, the plaintiffs in Texas v. United States (known as California v. Texas in the Supreme Court) argued that the ACA is no longer constitutional with a penalty-less mandate because the Supreme Court ruled in National Federation of Independent Business v. Sebelius on June 28, 2012, that the individual mandate was constitutional based on Congress’s power to tax. On March 2, the Court announced that it would hear the case later this year, most likely during its next term starting in October 2020, but when it will hear oral arguments is unclear, and the Court will probably not rule on the case until 2021.c

The ACA’s fate could also be decided in the ballot box on the first Tuesday in November, as current presidential candidates have proposed a wide range of far-reaching policy alternatives, including “Medicare for All,” various public option approaches, preservation of the ACA and replacement of the ACA (pending congressional willingness and a ruling from the Supreme Court). 

What to expect 

Reining in prescription drug prices, enacting hospital price transparency requirements and revisiting the constitutionality of the ACA and the way the entire U.S. healthcare system is organized all will remain unresolved issues in 2020, preserving the status quo for now and making 2021 a potentially pivotal year. 

Footnotes

a. U.S. Department of Health and Human Services, “Trump administration announces historic price transparency requirements to increase competition and lower healthcare costs for all Americans,” press release, Nov. 15, 2019.

b. U.S. Department of Health and Human Services, “Trump administration announces historic price transparency requirements to increase competition and lower healthcare costs for all Americans,” press release, Nov. 15, 2019.

c. Keith, K., “ACA Litigation Round-Up: A Status Check,” Health Affairs, Jan. 29, 2020.

About the Author

Ken Perez

is vice president of healthcare policy, Omnicell Inc., Mountain View, Calif., and a member of HFMA’s Northern California Chapter.

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