Policy & Politics

CVS Exec Says Employers ‘Shape the Economics’ of PBMs

With the Federal Trade Commission investigating major PBMs’ business practices and reform measures gaining momentum in Congress, executives of the country’s three largest PBMs have been busy assuring investors and analysts that they can withstand the heat. The recent Bernstein Strategic Decision Conference proved no exception, as CVS Health Corp.’s chief financial officer made the case there that employers and health plans — rather than PBMs — are in the driver’s seat when it comes to deciding how contracts are written.

Industry experts tell AIS Health, a division of MMIT, that while it is true that some employers may prefer the status quo, that’s certainly not the case universally. And they say the argument that employers and health plans use “sophisticated consultants” ignores the fact that those same consultants can get paid hefty sums by PBMs when they win contracts.


Community Pharmacist Group Greets Optum Rx Programs With Cautious Optimism

Optum Rx, the PBM owned by UnitedHealth Group, recently launched new programs that will reimburse community pharmacies for helping vulnerable and underserved patients access critical health care services. The move comes as major PBMs like Optum Rx are facing ever-increasing scrutiny for their business practices — including from rural and independent pharmacies that contend big PBMs are driving them out of business.

A trade group for community pharmacists and a health policy expert both say that the programs have promise, although they also say it’s unclear how big of an impact Optum Rx’s initiatives will ultimately make.


As COVID-Related Policies Expire, Health Coverage May Reshuffle

The Congressional Budget Office estimated that in 2023, 248 million people who are younger than 65 will have health insurance coverage, with over 57% covered through employment-based health plans. As COVID-era policies expire over the next decade, employment-based coverage will grow to 159 million and remain the largest source of insurance.

The coverage patterns vary significantly by income. People with income less than 150% of the federal poverty level are more likely to be uninsured or covered through Medicaid or the Children’s Health Insurance Program, while those with higher income are predominantly insured through employer-sponsored coverage.


CMS Tells States to Slow Down Medicaid Disenrollment as Florida, Arkansas Reports Raise Alarm

Medicaid redeterminations resumed in recent weeks after years of pandemic-related policies that suspended income verification for the safety net health insurance program, and some states — particularly Florida — seem to be moving faster than others to remove beneficiaries from their rolls, prompting a warning from the Biden administration. Experts say that the pace of redeterminations will vary from state to state — and so will redeterminations’ possible negative effect on health equity, which could intensify if states are cavalier or overaggressive with disenrollments.

“We’re looking closely at the Medicaid renewal numbers released by several states today. Keeping eligible people covered is our #1 priority. States need to do their part to keep people from losing coverage due to red tape,” said CMS Administrator Chiquita Brooks-LaSure on Twitter on June 1. The CMS-controlled Twitter account for Medicaid, while retweeting Brooks-LaSure, said that “we are closely monitoring the Medicaid renewal numbers that states are reporting,” and added that “we will continue to work directly with states to help keep eligible individuals covered.”


Stymied in Bid to Expand Site-Neutral Pay Policies, Payers Support Transparent Billing

For years, payers and plan sponsors have pushed to broaden so-called site neutral policies, which generally aim to prevent hospital outpatient departments from commanding greater reimbursement for the same services as those provided in doctor’s offices. In the latest salvo, the sponsors of newly proposed legislation are aiming for a seemingly easier-to-achieve goal: billing transparency.

That legislation, sponsored by Reps. Kevin Hern (R-Okla.) and Annie Kuster (D-N.H.), is called the Facilitating Accountability in Reimbursements (FAIR) Act. The legislation would require all off-campus hospital outpatient departments to have separate national provider identification (NPI) numbers by Jan. 1, 2025. It would also direct CMS to prioritize auditing provider facilities that were recently purchased by large health systems “to ensure they are meeting the remote location of a hospital facility requirements,” according to Hern’s office.


CBO Official: Congress Is Scrutinizing Coverage Variation Based on Race, Income

The Congressional Budget Office (CBO) garnered headlines recently when it projected that not only will the uninsured rate reach a record low this year, it will creep up again in the next 10 years. In a June 1 webinar hosted by Health Affairs, a CBO official expounded upon how those projections came about, noting that at the behest of Congress, the agency is closely following how coverage shifts affect particular demographics.

In its new projections, CBO said that the uninsured rate among people who are younger than 65 will increase from an unprecedented 8.3% this year to 10.1% in 2033, which would still be below the 12% rate from 2019 before the COVID-19 pandemic. The estimates, which were published in Health Affairs on June 24, show the impact that the expiration of temporary policies put into place during COVID will have on insurance coverage.


House Hearing, Legislation Emphasize PBM Transparency

During a May 23 hearing held by the House Oversight and Accountability Committee, both Republican and Democratic representatives — as well as the witnesses — seemed to agree that PBM reforms are needed. However, a consensus wasn’t clear on what policies are best suited to fix problems with the current pharmacy benefits landscape, other than mandating increased transparency into how PBMs do business.

Just one day after the hearing, another House panel — the Energy and Commerce Committee — advanced the Promoting Access to Treatments and Increasing Extremely Needed Transparency (PATIENT) Act of 2023, which would require PBMs to annually report to employer plan sponsors a host of information about prescription drug spending, utilization, acquisition costs, rebates and more. Specific to the Medicaid program, the legislation would also ban spread pricing, which occurs when PBMs pay pharmacies dispensing a drug less than what they charge payers and pocket the difference. The Biden administration on May 23 proposed a regulation that targets spread pricing in Medicaid, but it does not ban the practice.


House Committee Hearing Targets PBMs, Provider Consolidation

During a May 17 hearing, PBMs and merging hospitals were in the crosshairs of a U.S. House of Representatives subcommittee considering policies to slow the growth of health care prices. Although independent experts called as witnesses agreed with members’ assertions that PBMs, hospital mergers, and hospital purchases of independent physicians exacerbate high health care costs, the experts also pointed out that prices are already too high, and preventing hospital mergers or reining in PBMs will do little to reverse decades of price growth.

The hearing, titled “Why Health Care is Unaffordable: Anticompetitive and Consolidated Markets,” was convened on May 17 by the Health Subcommittee of the House Ways and Means Committee. The hearing piled on to the growing momentum across Congress that seems likely to result in more stringent PBM regulations, with majority Republicans tipping support for policies that would rein in PBMs.


Senate, House Panels Advance Plethora of PBM Reform Measures

In the space of a week, multiple PBM-regulating bills have advanced in House and Senate committees that address a variety of concerns about how the industry does business. However, industry observers say it’s still unclear what reforms will prevail in the push to overhaul a sector that is increasingly bearing blame for creating a byzantine and expensive drug pricing system.

“It’s one of those things where it’s not a burning issue that you can poll and constituents go crazy about, but the issue of PBMs and what the heck are they — and the feeling that there is something potentially improper about the way they’re doing [their job] — may be enough to get legislation [passed],” says James Shehan, chair of the FDA regulatory practice at the law firm Lowenstein Sandler LLP.


As Copay Accumulators Proliferate, So Do Efforts to Ban Them

In February 2023, the Help Ensure Lower Patient (HELP) Copays Act (H.R. 830), bipartisan federal legislation that would prohibit the use of copay accumulator programs, was reintroduced to Congress. The bill would require health plans and PBMs to count the value of copay assistance that patients receive toward their cost-sharing requirements, and it would apply to individual, small-group and employer-sponsored health plans.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies o­ffer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Another common practice, copay maximizers, takes the total amount of a manufacturer’s copay offset program and divides­ it by 12, making that amount the new monthly copayment on any given drug over the course of a year.