Unanimous Committee Passage for Ambulatory Surgical Centers for Worker’s Comp

HB 1332 – Ambulatory Outpatient Surgical Centers
Authored by Rep. Matt Lehman (R-Berne)
Sponsored by Sen. Phil Boots (R-Crawfordsville)

Provides that ambulatory outpatient surgical centers (ASCs) may be reimbursed in an amount not to exceed 225% of the ASCs Medicare reimbursement rate. Provides that the payment to an ASC for a medical device under worker’s compensation may not exceed the invoice amount plus 3%.

Chamber position: Support in part/Neutral in part on the hospital language

The latest: The bill was amended to add Sen. Karen Tallian’s (D-Portage) language that would provide a benefit increase in the amount of 2% per year for three years. The amended bill also changed the hospital reimbursement to a “not to exceed” 200% (currently reimbursed as 200% of the amount Medicare would pay or negotiated). Additionally, the amendment increased the amount paid to ASCs to 275%. The bill passed the Senate Pensions and Labor Committee 10-0; it now goes to the full Senate for second reading.

Indiana Chamber action/commentary:  The Indiana Hospital Association testified first and communicated its opposition. There are still some employers, worker’s compensation carriers and providers that negotiate their own contracts above the 200% limit. It may seem like a small portion of the overall pool, but this could have an impact on services, the group noted.

The Indiana Chamber testified in favor of the bill but specifically said that we were neutral on the part of the amendment that referred to hospital reimbursement. We were neutral when the original language passed in 2013 and remain so. The Chamber further explained the rationale for capping ASC reimbursements because of the data/studies conducted by the Workers Comp Research Institute. This research shows that since the implementation of the hospital reimbursement fee cap, those expenses changed trajectory and have stabilized – while the ASCs’ payments continue to rise.  The Chamber made it very clear that ASCs should not be paid at the same rate that hospital outpatient rates are paid. The reason is that CMS/Medicare pays at a substantially lower rate for ASCs than hospitals. Examples were shown on knee and shoulder surgeries with, in some cases, two times the difference.

In 2014, Georgia set reimbursement rates for hospitals and ASCs at 225% of Medicare for hospital outpatient and had to lower it for ASCs in 2018. Further, the word “outpatient” should be struck from the entire bill. CMS/Medicare recognizes “ambulatory surgical centers” as the term. Removing the word will remove any potential confusion once the legislation is enacted. The Chamber noted that while the Indiana Manufacturers Association was not present, the organization did support the bill. The Insurance Institute, the Indiana State Building and Construction Trades Council and the Indiana AFL-CIO also voiced support for the bill.  The Indiana Federation of Ambulatory Surgical Centers and the Indiana Academy of Ophthalmology joined the Indiana Hospital Association to oppose the bill.

Pharmacy Benefit Manager Bill Heads to Full House

SB 241 – Pharmacy Benefit Managers
Authored by Sen. Liz Brown (R-Fort Wayne)
Sponsored by Rep. Matt Lehman (R-Berne)

Requires a pharmacy benefit manager to obtain a license from the Department of Insurance. Establishes requirements for pharmacy benefit managers (PBMs). Provides for the insurance commissioner to adopt rules establishing licensure requirements, financial standards and reporting requirements for PBMs. Requires a PBM to: (1) disclose to contracted pharmacies the sources used to calculate the drug product reimbursement paid for covered drugs; (2) establish a process allowing contracted pharmacies, pharmacy services administrative organizations and group purchasing organizations to appeal to resolve disputes concerning the maximum allowable cost pricing; and (3) establish an Internet web site to support the appeal process. Establishes requirements concerning a PBM’s reimbursement for a contracted pharmacy when using a maximum allowable cost for a drug product. Allows a party contracting with a PBM to request an audit of compliance at least once per year. Provides that a person or entity that has contracted with a PBM is entitled to full disclosure of the terms of a contract between the PBM and any other person or entity concerning the purchase price for prescription drugs and the amount of any rebate. Requires a pharmacy services administrative organization acting on behalf of an independent pharmacy, pharmacy benefit manager or health plan, upon request, to disclose the terms of a contract concerning the actions taken by the pharmacy services administrative organization on behalf of the independent pharmacy, PBM or health plan. Repeals a statute on PBMs and moves its provisions concerning maximum allowable cost lists to the new chapter. Provides that a PBM must obtain a license by December 31, 2020, in order to do business beginning January 1, 2021.

Chamber position: Neutral with concerns

The latest: The Health Insurance Committee passed the bill 12-0; it now moves to the House floor.

Indiana Chamber action/commentary: The Chamber has consistently said that less regulation on PBMs is the best route because employers use PBMs to negotiate drug prices and assist employees in drug adherence. Chamber member TrueScripts, a PBM created in southern Indiana by a former pharmacist, testified neutral to the bill. Its founder, Nathan Gabhart, said that disclosure in contracts is very important. He continued that PBMs are key, as they lower costs, and his company created its PBM to protect clients and customers. Gabhart also noted that as a pharmacist he disliked spread-pricing but clients do choose this as an option. CVS Caremark opposes the bill along with Express Scripts. The pharmacists support the bill as does Eli Lilly.

It appears that the House is looking for the (key word) “transparency” as the solution to the PBM issue.   The bill will pass the House most likely in its current form. Senator Brown’s bill will probably be the vehicle that will eventually be worked out in conference committee.

QUICK HITS: Billing Transparency and Smoking Age Bills March On

House Bill 1004 (Balance Billing for Medical Care), authored by Rep. Ben Smaltz (R-Auburn), was amended in the Senate Health Committee to include good faith estimates, site of service and non-compete language for physicians. The most controversial part of the bill is the site of service language, which states that service facility means the address where the services of a provider facility or practitioner were provided. The term consists of exact address and place of service codes as required on Centers for Medicare & Medicaid Services forms 1500 and 1450, including office, on-campus location of a hospital and off-campus location of a hospital. The issue is that some hospitals own other facilities that may not be full-blown hospitals but reimburse as though they are. Employers argue that they want to send employees to lower cost facilities but don’t want to pay for it at a hospital rate, thus driving up health care costs. Hospitals argue that no other state is doing this and the impact will be significant on hospitals because they have relied on this for their business models. Rural hospitals were of special concern, with early estimates of an impact somewhere north of $200 million. More recently, it has been suggested it may be as high as a billion dollars or more. After a long debate, the bill passed the committee 8-4. It is believed that a second reading amendment will address the rural hospitals’ concerns, or they may be carved out of the proposed legislation altogether. The Chamber’s position on the legislation is support in part.

House Bill 1006 (Regulation of Tobacco Products), authored by Rep. Cindy Kirchhofer (R-Beach Grove), passed the Senate Health and Provider Services Committee 10-0. Legislation to change the legal smoking age from 18 to 21 and strengthen the federal law, including penalties for violation, is moving in two different bills (SB 1 is the other). Both measures are now very close to mirroring each other. The Chamber has been supporting this measure and continues to voice the negative impact smoking has on employers. The bill is expected to sail through the Senate.

Resource: Mike Ripley at (317) 264-6883 or email: [email protected]