Between now and the November 2020 election, Democrats and Republicans are unlikely to pass any legislation other than budget bills or other “must-pass” legislation. The sharpened rhetoric and hyperbole associated with the impeachment hearings taking place in the House are exacerbating this division.
Republicans will be defending 23 seats in 2020 (including special elections in Arizona and Georgia) versus the Democrats defending 12 seats. If Democrats were to pick up 4 of the Republican seats, they could change control of the Senate. This knowledge will make it challenging to pass any bills other than must-pass legislation, even in the Senate—including issues for which there have been bipartisan efforts to date, such as legislation to address “surprise medical bills” and, to a lesser extent, proposals to reduce the cost of prescription drugs.
A bipartisan Senate bill to curb the practice of surprise medical bills was introduced in the Senate last May. The bill’s cosponsors—Sens Bill Cassidy (R, Louisiana), Maggie Hassan (D, New Hampshire), and Michael Bennet (D, Colorado) introduced the Stopping The Outrageous Practice of Surprise Medical Bills Act of 2019, S1531. It requires an independent arbiter to choose a price for the disputed service that is based on the market rate for the service in the state. Because this process is similar to how baseball players can choose to arbitrate their salary instead of accepting what the team offers, it has been dubbed baseball-style arbitration. New York passed a bill modeled on this system in 2015 that has been used to settle about 2000 disputes and New Jersey passed a similar law in 2018. The bill has not yet been voted on by the full Senate.
House Energy and Commerce Committee chairman, Frank Pallone (D, New Jersey) and ranking member Greg Walden (R, Oregon) also released a draft bill addressing surprise medical bills in May. The No Surprises Act, HR 3630, proposed limiting insurers to charging plan holders no more than the median in-network rate for an emergency service, even if provided out of network. The bill was incorporated into HR 2328, the Community Health Investment, Modernization, and Excellence Act of 2019, which focuses on extending and reauthorizing funding for community health centers and the National Health Service Corps, and has not yet been subject to a vote by the full House.
The basic focus of these bills is requiring hospitals and physicians to agree to a benchmark rate that is at the median level of the rate in the area or requiring insurers and self-insured employers to go to arbitration with physicians and hospitals. However, because insurers and employers are fighting the notion of forced arbitration and physicians and hospitals are opposing the idea of a benchmark rate based on the median, it’s not clear whether any legislation on surprise medical bills will result.
If such legislation did pass, a just-released study from the Brookings Institution suggests that arbitration—at least the approach used in New York—would increase costs to insurers and probably to consumers, as well. This is because New York’s guidance says that arbiters should consider the 80th percentile of billed charges. This would be inflationary on 2 grounds. Billed charges are list prices set by hospitals and physicians and are much higher than in-network rates. In addition, the 80th percentile is a very high percentile to use as a reference. The combined effect increases physician leverage in negotiations with insurers and encourages further network dropout or higher in-network rates. However, it is not the principle of arbitration that would be problematic, but rather the standard—80th percentile of billed charged—that is used.
Prospects for legislation to lower the cost of prescription drugs do not look any more promising. Such legislation seems to be mainly an interest of the Democratic-led House and the White House, with many congressional Republicans uneasy about the ongoing discussions. Many Republicans resisted the President’s 2018 proposal to tie certain Medicare drug prices to the prices used in other countries.
The Democrats’ proposed legislation, the Lower Drug Costs Now Act of 2019 (HR 3), would allow the secretary of the Department of Health and Human Services (HHS) to negotiate price for up to 250 drugs. It would also penalize companies that do not negotiate with HHS with a substantial fine. The negotiated price would be available to people covered by private plans, as well as those covered by Medicare. It would also limit out-of-pocket expenses for Part D drugs to $2000.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 specifically prohibited the secretary of HHS from engaging in price negotiations for prescription drugs covered by Medicare. Unlike the Department of Veterans Affairs (VA), which negotiates with pharmaceutical companies over prices, HHS actually has no experience doing so. Other parts of Medicare typically use administrative pricing, where the prices are set according to a formula or procedure that is set in law. Also, unlike the VA, Medicare requires all US Food and Drug Administration (FDA)–approved drugs to be offered for 7 different classes of drugs, whereas the VA allows a formula that excludes many FDA approved drugs.
The Associated Press reported in early November that President Trump does not support the Democrats’ bill, and it is unlikely that Senate Republicans would support it in any case. Both of these issues are not going away, but their resolution will likely not happen until after the 2020 election.
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Gail Wilensky, PhD Gail Wilensky, PhD, is an economist and Senior Fellow at Project HOPE, an international health foundation. Dr Wilensky previously directed the Medicare and Medicaid programs and served in the White House as a senior adviser on health and welfare...