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Build Back Better: What You Need to Know

Posted: December 17, 2021

On November 19th, the U.S. House passed the Build Back Better (BBB) legislation, President Biden’s signature social spending plan, after months of negotiations among the Democratic caucus. With regard to healthcare policy, the bill passed by the House includes extensive coverage and access expansions. For example, it provides increased premium assistance for the Affordable Care Act exchanges, adds hearing benefits to fee-for-service Medicare, and puts in place a monthly $35 cost-sharing cap in Medicare and private markets for insulin, a medication that has long been the focus of congressional inquiries into high drug prices. Additionally, among other changes, the legislation closes the Medicaid coverage gap and streamlines postpartum Medicaid coverage.

As enacted, the legislation’s drug pricing provisions were significantly narrowed as compared to introduction, but the bill still contains sweeping drug pricing reform. Of high interest to Medicare beneficiaries, BBB reforms Medicare Part D cost-sharing by putting in place a $2,000 annual cap on out-of-pocket costs. Currently, even in catastrophic coverage, beneficiaries are still responsible for 5% coinsurance, so an annual cap has long been championed by patient advocates.

Other drug pricing provisions include inflationary rebates, which require that, if a drug’s price rises faster than inflation, the drug company must reimburse Medicare for the difference. Unfortunately, the legislation also repeals the 2018 rebate rule, although it creates some additional PBM oversight instead.

Finally, the legislation creates a “maximum fair price” mechanism that would allow the government to demand deep discounts from certain medications. This provision is still subject to negotiation, as the language currently under consideration in the Senate is different from the language passed by the House. The main concern from the buy-and-bill provider perspective is that providers may be underwater on medications subject to the new mechanism; the bill provides no method to keep whole providers. CSRO has expressed concern about this aspect and is currently exploring a legislative solution that would remove providers from the mechanism altogether, while still ensuring that both Medicare and beneficiaries see significant savings.

As noted, the legislation was passed by the House but must now clear the Senate, where negotiations are still ongoing. Although Majority Leader Schumer had hoped to vote on the legislation before the end of the year, this is highly unlikely to happen. There are several hurdles still to clear, including a review by the Senate Parliamentarian. Additionally, a key sticking point for moderate Senate Democrats will be the Congressional Budget Office score, which shows that BBB will increase the deficit by $367 billion over ten years. The Senate will resume its negotiations in January.

Questions? Email us at info@csro.info.

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