Reducing health care costs is one of the top priorities of Republican lawmakers in Indiana this term. Several bills have been introduced that aim to make prescription drugs more affordable, prevent costly billing errors by physicians, and ban non-competition clauses for physicians.
Senate bill 8: Passing on drug discounts to consumers
SB 8, authored by Sen. Ed Charbonneau, R-Valparaiso, would require pharmacy benefit managers (PBMs) to pass on the rebates and rebates they receive for prescription drugs to individual patients or to all plan members.
PBMs mediate between pharmaceutical companies, pharmacies and health insurance companies, using the large networks of health insurers and the millions of patients they represent to negotiate lower drug prices.
Under SB 8, at least 85% of these discounts would be passed on to individual Hoosiers at pharmacy counters rather than being pocketed by PBMs.
The original role of PBMs was to negotiate drug prices and strike the balance between “access and affordability,” said Antonio Ciaccia, president of consulting firm 3 Axis Advisors and CEO of drug pricing research nonprofit 46brooklyn Research.
“Over time, PBMs started to get their hands in the cookie jar,” Ciaccia said. “Rather than just working to find a fair price or a good balance price for us, they started being paid by the drug manufacturers in exchange for covering the drugs.”
Drug makers and PBMs are exempt from the federal anti-kickback law, which allows them to engage in pay-to-play behavior that inflates the price, Ciaccia said.
Regulating this pay-to-play behavior is needed to address the core issue, Ciaccia said, but Indiana’s SB 8 will help by ensuring rebates and rebates PBMs receive are passed on to the consumer.
“When I’m a patient and my influence as an individual is combined with other people taking medications… to shrug off manufacturers for these big rebates and markdowns that add up to around $200 billion, it stands to reason that I should.” be a beneficiary in that regard,” Ciaccia said.
The flip side of this argument is that some of these PBM rebates are used by health insurance companies to lower premiums for everyone enrolled in the health plan. So there will inevitably be debates, Ciaccia said, about whether that money should go directly to patients, employers, PBMs, or all of the above.
West Virginia is a state that has passed a similar law that allows discounts to be 100% passed on to consumers.
Some researchers warn that measures to reduce prescription drug costs may have unintended consequences. Drugs cost more in the US than other countries, but in return some argue that Americans get early access to cutting-edge medicine. For example, 12 new cancer drugs were launched in the US between 1995 and 2005, compared to a total of 13 drugs in six other affluent countries, including the UK, Japan and Germany. Some studies suggest that tight price controls would “severely delay” advances that would lead to few new life-saving drugs.
House bill 1017: Tackling drug waste through prescription drug donation camps
Prescription Drug Donation Centers distribute unused drugs that would otherwise be thrown away.
HB 1017, authored by Rep. Steve Bartels, R-Eckerty, would establish an Indiana prescription drug safekeeping program that would allow people to donate unopened prescription drug and supplies to a centralized or local safekeeping facility for use by an authorized recipient. Forty states have similar programs, according to the National Conference of State Legislatures.
The bill includes provisions to ensure the safety of donated medicines.
During the House Public Health Committee hearing on Jan. 17, an Indiana oncologist said some patients end up with unused drugs that could cost as much as $10,000 per dose. In Indiana, the only option is to discard these drugs. Meanwhile, providers like him regularly encounter patients struggling to afford life-saving drugs.
An analysis of federal data shows that from 2017 to 2020, Medicare spent more than $2.9 billion on discarded drugs.
Proponents of the bill argue that the disposal program could result in cost savings for the state and make expensive drugs more accessible to more people. However, some argue that a small minority of Hoosiers would be eligible under the bill’s strict criteria.
HB 1017 was passed by the House Public Health Committee last week and referred to the Ways and Means Committee.
Senate bill 6: Elimination of errors in medical billing in “location of service”.
SB 6, authored by Sen. Charbonneau, aims to eliminate high medical expenses resulting from medical billing errors. Specifically, the bill fixes “location of benefit” flaws that could drive up payment rates for inpatient and outpatient benefits.
The environment in which a healthcare service is delivered affects its cost, as different environments have different overhead costs. For example, if an outpatient service is provided at a hospital or outpatient surgery center, providers may charge facility fees that increase the amount they are reimbursed for the same services provided at a location outside of the hospital, e.g. B. in a doctor’s office or an independent clinic.
When settling for payment, providers use two-digit codes to indicate the environment in which a service was provided.
SB 6 would prohibit healthcare facilities from charging higher “hospital fees” for services that are part of a hospital system but not on a hospital campus.
It is unclear how often this occurs in Indiana. However, a 2015 review by the US Department of Health and Human Services’ Office of Inspector General found that incorrect billing location across the country caused Medicare Part B contractors to overpay physicians nearly $63 million between calendar years 2005 and 2009 paid.
According to a press release from Senate Republicans, this bill “could save Hoosiers millions a year in medical bills.”
Senate bill 7: Prohibition of non-competition clauses for doctors and kickbacks for referrals
SB 7 aims to ban non-compete laws on physicians, which Senator Justin Busch (R-Fort Wayne) argues, to prevent competition that could reduce health care costs and keep physicians in underserved Indiana communities.
“I got the horror stories of ‘you eliminated my position, I would have stayed in that hospital. And now they won’t even let me train because it’s within a half-mile radius of my non-competition,” he said.
The bill aims to ban new non-compete covenants for doctors in Indiana starting July 1. It would also prohibit a referring physician from receiving any compensation or inducement from a healthcare facility or another physician located in the same healthcare network for referring a patient to the healthcare facility or another physician.
The Indiana bill comes as the Federal Trade Commission proposed earlier this month to ban non-compete agreements on about 30 million US workers in all industries, including physicians.
Some legal experts and economists who study non-competition clauses say their application is of particular concern to low-skilled workers, as such agreements can stifle wage growth and prevent better working conditions.
But it’s not so clear-cut for doctors, said Ohio State University economics professor Kurt Lavetti.
A 2018 study he authored surveyed 2,000 primary care physicians in five states and found that practices that use non-compete agreements have lower physician turnover. The results also suggest that new physicians are more likely to develop their practice and have a more robust patient base when bound by non-compete obligations, in part because senior physicians on staff are more willing to refer patients to the new physicians.
Hospitals and medical associations spend a lot of money hiring doctors and establishing practices, so they want non-compete agreements to prevent their doctors from leaving — and taking their patients with them, said Kenneth Dau-Schmidt, a law professor at Indiana University.
But there is also concern that non-compete obligations could result in a doctor leaving a practice being forced to leave the community and leave their patients behind, he said.
“There is a public interest in doctors practicing in the area. There is also a public interest in patients being able to choose their own doctors,” he said.
This isn’t the first time the Indiana legislature has attempted to eliminate the non-compete clause for physicians. And SB 7 isn’t the only bill targeted at them in this session.
House bill 1004: Hospital cost caps and other provisions
HB 1004, authored by Rep. Donna Schaibley, R-Carmel, aims to penalize nonprofit hospitals that charge more than 260% of the state Medicare reimbursement rate for a healthcare service.
A study by the RAND Corporation last year found that Indiana ranks seventh in the nation for hospital costs. The study shows that Hoosiers paid hospitals nearly 300% more than Medicare would pay for the same services.
The bill also includes provisions that would allow eligible physicians a tax break of up to $10,000 if they have an interest in a physician’s office, establish requirements that a hospital or healthcare provider must meet to hire a physician, and prohibit certain ones non-profit hospitals from entering into medical non-compete agreements.
House bill 1003: Employer tax breaks for offering medical reimbursements
HB 1003, authored by Rep. Craig Snow, R-Warsaw, would allow employers to receive a tax break if they offer their employees health reimbursements instead of traditional employer-provided health insurance plans. The bill also includes provisions related to prior approval practices and reimbursement rates set out in contracts between healthcare facilities and health insurers.
Indiana Public Broadcasting reporters Adam Yahya Rayes and Brandon Smith contributed coverage.
This story is from a reporting collaboration that includes the Indianapolis Recorder and Side Effects Public Media – a public health news initiative hosted by WFYI. Contact Farah at [email protected] Follow on Twitter: @Farah_Yousrym