To make the important benefit decisions that impact your workforce, it’s important to stay in the know about legislation that could impact prescription benefits. And while we don’t have a crystal ball, we do keep an eye on the legislative and regulatory landscape.
Here is a brief summary of legislative topics on the horizon in 2024.
Anti-steering
Anti-steering legislation restricts a PBM’s (Prescription Benefit Manager’s) ability to differentiate or incentivize the use of preferred pharmacies — specifically those affiliated with the PBM. Legislation in this area runs the risk of limiting flexibility in designing pharmacy networks that are both high-quality and affordable.
Copay accumulator
Copay accumulator features — applying coupon and similar discounts to the total price of a drug, not specifically to a plan member’s copay — can be an effective tool in discouraging the use of expensive medicines that may increase overall health care costs for both employers and their employees, despite a less expensive, equally effective option being available.
Delinking
Delinking legislation would prohibit linkages between PBM compensation and prescription drug list prices, removing an option in the structuring of contracts and arrangements between plan sponsors and PBMs. Delinking may disincentivize PBMs to push for competitive pricing from manufacturers and pharmacies through manufacturer rebates and coupons.
ERISA/Part D Preemption
When Congress enacted the Employee Retirement Income Security Act (ERISA) in 1974, they did so with the aim of minimizing the administrative burdens of plan sponsors — and assuring workers that certain standards would be complied with. Achieving those aims was made possible with the inclusion of a broad preemption of state laws.
While plan administration and rule enforcement are under the sole jurisdiction of federal regulators, there are occasionally legal challenges to such that threaten uniformity across states and could make it harder for large multi-state plans to offer benefits.
Inflation Reduction Act Implementation
The IRA contains three healthcare components related to prescription drugs.
- It caps a Medicare Part D plan member’s annual out-of-pocket prescription drug costs at $2,000.
- It also allows Medicare to negotiate certain drug prices. Presently, 10 drugs are affected — with prices in effect beginning 2026 — and an additional fifteen are slated to go into effect in 2027.
- Additionally, the Act calls for “smoothing” or allowing by Medicare Part D members to spread their payments for prescription drugs over the course of a year.
Implementation guidance for these changes is still being drafted. These changes may have downstream effects on the private sector — particularly in relation to negotiations for drugs and drug pricing.
Spread Pricing
This risk-mitigation pricing model gives prescription benefit plan sponsors cost predictability by giving a price-certain for prescription drug benefit reimbursement to pharmacies. If the pharmacy charges more than the rate agreed to between the plan sponsor and the PBM, the PBM takes a loss. Similarly, if the pharmacy charges less than the PBM’s negotiated rate with the plan sponsor, the PBM earns a margin. But the risk is always held by the PBM.
Legislation at both state and local levels seeks to prohibit or require disclosure of spread pricing models.
Transparency
CarelonRx provides information and tools that help plan sponsors and plan members, alike, make fiscally responsible choices in the quest for whole health. Legislation may require PBMs to disseminate additional data.
Additional Healthcare Activity
Additional healthcare legislative activity could impact PBMs. There are a few topics, in particular, that warrant attention.
Prior Authorization
While legislative activity addressing Prior Authorization has historically focused on medical services, watch for increasing activity in the prescription drug space.
Keep in mind that CarelonRx doesn’t apply Prior Authorization requirements broadly. We apply them for patient safety, where there’s lack of evidence regarding efficacy, where there’s opportunity for proactive management, and where we see potential for significant abuse — as sometimes exists with opioids.
In addition, we strive to continually improve our Prior Authorization process.
- We review our requirements quarterly to make sure our requirements result in a demonstrable impact on quality, affordability, and safety
- We try to make Prior Authorization easy and efficient through an electronic Prior Authorization process that, in most cases, delivers a response instantaneously
- In instances where we share risk with a care provider, we employ fewer Prior Authorization requirements
Artificial Intelligence (AI)
The White House has issued an Executive Order to help manage the risks of artificial intelligence. It addresses its safe and ethical use, data privacy, individual rights and protections, and technical innovation.
Our Elevance Health Responsible AI Team takes safety, risk, and the potential for bias very seriously. To that end, we follow word identification and spelling test (WIST) and other voluntary standards.
Healthcare Data Privacy
The U.S. Department of Health and Human Services Office for Civil Rights (OCR) has issued a notice of proposed rulemaking and guidance on the Health Insurance Portability and Accountability Act (HIPAA) and plan members’ protected health information (PHI) related specifically to reproductive health care.
Mental Health Parity
In 2023, as the Mental Health Parity and Addiction Equity Act (MHPAEA) celebrated its 15th anniversary, new regulations were proposed.
The Act requires health insurers and group health plans that offer mental health and substance use disorder benefits to provide the same level of benefits for mental and/or substance use treatment and services that they do for medical care.
Proposed regulations would require plans to apply a new mathematical test to determine whether certain limits on behavioral health coverage are no more restrictive than limits on medical coverage. They would require plans to document that the processes, strategies, evidentiary standards, and other factors used to design and apply specific limits on behavioral health are comparable to those used to design and apply limits on medical benefits. Finally, the proposed regulations would require plans to collect, evaluate and analyze specific types of outcome data.
Conclusion
We hope this brief overview helps you prepare for what may lie ahead for prescription benefit plans, the plan members they serve, and employers like you who make that possible. For more information, including a webinar that dives deeper into legislative topics, please visit carelonrxconnects.com.
