Insurer price transparency rule faces legal challenges: 4 takeaways
Though the hospital price transparency rule has dominated headlines over the past few months, the insurer-focused version has largely stayed out of the limelight since being finalized last year. Until now.
In the past two weeks, the U.S. Chamber of Commerce and the Pharmaceutical Care Management Association have filed lawsuits challenging the price transparency rule for health insurers. These appear to be the first legal challenges to the rule.
Here are four things to know:
1. The insurer price transparency rule
Finalized at the end of October 2020, the rule requires payers and self-insured plans to make personalized information on cost-sharing available and to publicly disclose the rates they pay to providers through online tools. Insurers and plans must also make this information available in paper form if requested. The rule aims to rein in healthcare costs.
Beginning in 2022, payers have to publicly release negotiated rates for in-network providers, historical out-of-network allowed amounts and billed charges, and drug pricing information, according to a Health Affairs blog post.
When the rule was finalized, the national payer association America’s Health Insurance Plans noted their disappointment and said that the rule will stifle competition and drive healthcare prices higher.
2. The Chamber of Commerce lawsuit
Through its lawsuit, filed Aug. 10, the Chamber of Commerce is challenging specific provisions of the rule that it says are not consumer-focused and instead are “counterproductive, wasteful and unlawful.”
Specifically, the lawsuit challenges the section of the rule that requires insurers to post internal pricing data on a website in three machine-readable files. The content of the files will not be understandable by the average consumer, the suit alleges.
For example, the rule requires the disclosure of “applicable rates” for all items and services covered by a plan in-network, except prescription drugs. But, according to the lawsuit, the applicable rate for a particular item or service may include different data points, such as the negotiated rate, the derived amount and the underlying fee schedule rate.
“The machine-readable-file requirement forces plans…to disclose vast amounts of highly technical pricing data in a ‘digital representation’ designed to be readable by a computer, instead of plain language designed to be accessible to individual patients and consumers,” the lawsuit claims.
3. The Pharmaceutical Care Management Association lawsuit
The national trade association, which represents pharmacy benefit managers, filed its lawsuit on Aug. 12.
The suit challenges the portion of the price transparency rule that requires plans and issuers to publicly reveal “sensitive data” about prescription drug prices, including the “historical net prices,” which are paid after deducting drugmakers’ price concessions.
Prescription drug prices are set through private negotiations between drug manufacturers and PBMs on behalf of their plan and issuer clients, among others. The prices include concessions that are provided by pharmacies and manufacturers to improve the treatment of their drug on plan formularies — the tiered list of drugs covered by a health plan.
“This entire system depends on PBMs’ ability to effectively negotiate price concessions from drug manufacturers,” the lawsuit states. “And that ability, in turn, depends on PBMs’ ability to conduct meaningful private negotiations.”
4. The goal of the lawsuits
In both legal challenges, the plaintiffs want the provisions of the rule they have targeted to be declared unlawful.
Further, the Chamber of Commerce is seeking injunctive relief barring the defendants from enforcing those provisions of the rule.
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