Relating to certain cost controls for health care services

Sponsored by the Senate Health and Human Services Committee

Topics:Health care Insurance

Same legislation: SF 431

Write your legislators about it

Official bill page Lobbyist declarations One-pager to print

Where it is now

Done: IntroducedFebruary 27, 2023
Done: SubcommitteeMarch 2, 2023
Done: Senate committeeFebruary 15, 2024
Done: Passes the SenateMarch 4, 202445–0
Stopped: House committeeDied when the General Assembly ended
Next: Passes the House
Next: To the Governor
Next: Signed into law

Died when the session ended The 2024 session adjourned on April 19, 2024, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?

What’s in it

AI summary Healthcare providers must list and share discounted cash prices for their services on their websites. Patients and uninsured individuals must be told about their right to pay these cash prices before receiving care. If a person chooses to pay a discounted cash price, their insurance plan must give them credit toward their deductible or cost-sharing.¹

Read the official explanation

This bill relates to certain cost controls for health care services and may be cited as “The Patient’s Right to Save Act”. Under the bill, all health care providers (providers) are required to establish and disclose the discounted cash price (cash price) the provider will accept for specific health care services (services). “Discounted cash price” is defined in the bill as the price an individual pays for a specific service if the individual pays with cash or a cash equivalent. The cash price shall be available to all covered persons (persons) and to all uninsured individuals. A provider shall post the cash prices on the provider’s internet site, update any change in a cash price within days of the change, and review each cash price at least annually. During the appointment scheduling process, and any intake process prior to the provision of a service, persons and uninsured individuals shall be informed of their right to pay for the service via the cash price. A person shall also be advised that they qualify for a deductible credit if they have not exceeded their deductible to date, and the criteria detailed in the bill is satisfied. A provider shall not enter into a contract that prevents the provider from offering a cash price below the contracted rates the provider has with a health carrier (carrier), or that prevents the provider from disclosing the provider’s cash price to persons. A person’s out-of-pocket pricing for each drug on a carrier’s formulary shall be available to a provider via an easily accessible and secure internet site hosted by the carrier at the point the provider prescribes drugs to a person. A provider shall provide an individual with an itemized list of all services provided to the individual, a statement that the individual paid out-of-pocket for the services, and if the individual is a covered person, a statement that the provider will not make a claim against the person’s carrier for payment for the services provided. Each plan shall disclose to the plan’s covered persons the average allowed amount for each service that is covered under the person’s plan. If a plan fails to disclose each average allowed amount, a person may substitute a benchmark selected by the commissioner of insurance (commissioner). A person who elects to receive service at a cash price that is below the average allowed amount shall receive credit toward the person’s cost-sharing as if the service had been provided by a network provider. “Average allowed amount” is defined in the bill. A plan shall not discriminate in the form of payment for any in-network covered service solely on the basis that the person was referred for the service by an out-of-network provider. If a person elects to pay cash price for a generic-brand drug that results in a lower cost than the average allowed amount for the name-brand drug under the person’s plan, the plan shall apply any payments made by the person for the generic-brand drug as detailed in the bill. A plan is required to provide an online form for the purpose of a person submitting proof of payment, and to annually inform persons of their options related to discounts and rebates. Annually at enrollment or renewal, a carrier shall provide notice to persons via the carrier’s health plan materials and on the carrier’s internet site of the option and the process to receive a covered service at a discounted cash price. If a person pays a discounted cash price that is above the average allowed amount, the plan shall give the person credit toward the person’s cost-sharing in an amount equal to the cash price. If a carrier denies a claim submitted by a person pursuant to the bill, the carrier shall notify the commissioner and provide evidence to support the denial to the person and the commissioner. A person may appeal a denial of a claim as detailed in the bill. If a carrier denies or more claims in any one quarter, the commissioner shall have the authority to investigate the denials.6. A person shall have access to a program that rewards the person with a savings incentive for medically necessary services received from providers that offer a cash price below the average allowed amount. Annually at enrollment or renewal, a carrier shall provide notice to persons via the carrier’s internet site of the savings incentive program and how the savings incentive program works. If a person exceeds the person’s annual deductible, the person’s plan shall notify the person of the savings incentive program. A person’s savings incentives for a service shall be calculated as the difference between the cash price and the average allowed amount. A savings incentive shall be divided equally between the person and the person’s plan, and may include a cash payment to the person and a third party as described in the bill. A provider shall not initiate or pursue a collection action (action) against a person, or a person’s guarantor, for a debt owed for a service unless the provider is in material compliance with the bill on the date that the service is provided. If a provider initiates or pursues an action in violation of the bill, the person may file for a declaratory judgment with a court of competent jurisdiction and the provider shall not continue the collection action while the suit is pending. If the court finds in favor of the person, the court shall order the provider to comply with the requirements detailed in the bill. Provided the provider does not initiate or pursue an action in violation of the bill, the bill shall not be construed to prohibit a provider from billing a person, a person’s guarantor, or a third-party payor, including a health insurer, for a service provided to the person, or to require a provider to refund any payment made to the provider for a service provided to the person. If a provision of the bill or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the bill which can be given effect without the invalid provision or application. The bill directs the department of administrative services (DAS) to conduct an analysis of the cost-effectiveness of offering a savings incentive program and deductible credit for state employees and retirees. DAS shall submit a report to the general assembly on or before September 1, 2025, containing an explanation as to the decisions to implement, or not to implement, a savings incentive program or deductible credit program. Any savings incentive program or deductible credit program found to be cost-effective shall be implemented for the 2025 state employee health insurance open enrollment period.

Changed since by amendment S-5039; see Amendments.

Full bill text²

House subcommittee

Named March 5, 2024. On March 7, 2024 it recommended indefinite postponement. Vote Total: 2-0.

Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part

1 written public comment to its subcommittee: January 25, 2024 (1) · on the Legislature’s site

Fiscal note

Can’t be estimated Compare with other bills

AI summary This bill implements new cost controls for health care services, including rules for discounted cash prices, deductible credits, and claim denial protections. The fiscal impact of increasing operational and administrative expenses for the State of Iowa Insurance Plan and the Board of Regents Insurance Plans cannot be estimated at this time, but may be significant. Additionally, the cost to the Department of Administrative Services to conduct a required analysis and report cannot be determined.³

Read the fiscal note

Description

Senate File 2381 relates to certain cost controls for health care services and does the following:

Adds the improper denial of claims, as described in the Bill, to the list of unfair methods of competition and unfair or deceptive acts or practices defined in Iowa Code section 507B.4.
Provides requirements for health care providers (providers) establishment and disclosure of discounted cash prices the provider will accept for specific health care services (services). The Bill prohibits a provider from entering into a contract that prevents the provider from offering or disclosing a cash price below the contracted rates the provider has with a health carrier.
Establishes disclosure requirements regarding deductible credits and for covered persons’ out-of-pocket pricing for prescription drugs that meet the conditions in the Bill.
Establishes disclosure and substitution requirements for health benefit plans regarding the average allowed amount for each health care service.
Requires credit to be applied towards in-network cost-sharing for covered persons who receive service at a discounted cash price other than the average allowed amount at the lower of the two amounts if the service is provided by an in-network provider.
Prohibits a health benefit plan from discriminating in the form of payment for an in-network covered service on the basis of the covered person’s being referred for the service by an out-of-network provider.
Establishes payment credit requirements for a covered person’s cost-sharing who purchases generic covered prescription drugs for less than the average allowed amounts for the name-brand equivalent.
Establishes requirements for health-denying claims pursuant to the Bill, including an appeal process and a trigger for an investigation into claim denials by the Commissioner of Insurance (Commissioner).
Requires health benefit carriers to provide covered persons with a program that rewards the covered person with a savings incentive for medically necessary services received from providers that offer a cash price below the average allowed amount.
Provides requirements for a provider’s initiation or pursuit of a collection action against a person for a debt owed for a service.
Requires the Department of Administrative Services (DAS) to conduct an analysis of the cost-effectiveness of offering a savings incentive program and deductible credit for State employees and retirees before August 1, 2025, and to submit a report to the General Assembly on or before September 1, 2025, containing an explanation of the implementation decision regarding a savings incentive program or deductible credit program. The Bill requires any such program to be implemented for the 2025 State employee health insurance open enrollment period.

Background

Iowa Code section 507B.4 establishes a list of unfair methods of competition and unfair or deceptive acts or practices with respect to the insurance trade, including but not limited to misrepresentation and false advertising of insurance policies, unfair discrimination, and unfair claim settlement practices.

Iowa Code section 507B.6 permits the Commissioner to issue and serve a statement of charges upon a person who the Commissioner believes has been engaged or is engaging in any unfair method of competition or any unfair or deceptive act or practice that would be in the public interest. At the hearing, the person has the opportunity to be heard and show cause why an order should not be made by the Commissioner to require the person to cease and desist from the acts, methods, or practices complained of.

The 2025 State employee health insurance open enrollment period begins October 2024.

Assumptions

Providers will be required to make the discounted cash price for health care services available to consumers.
Insurers will be required to provide the minimum negotiated charge a provider has negotiated with the carrier.
Health carriers offering prescription drug coverage will be required to make the out-of-pocket pricing for all formulary medications available.
The Bill may require operational and administrative changes to the insurance plans, which may increase expenses.
According to the DAS, in order to conduct the analysis of the savings incentive program required by the Bill, the DAS will need to hire an outside consultant with expertise in the subject matter. The outside consultant may cost up to $495 per hour. The total cost cannot be estimated at this time. The DAS states that any associated fiscal impact is not currently included within their operating budget.
According to the DAS, any savings that may result from the implementation of the savings incentive program or deductible credit program will be implemented for the 2026 State employee health insurance open enrollment period beginning October 2025.

Fiscal Impact

Senate File 2381 is estimated to increase operational and administrative expenses for the State of Iowa Insurance Plan and the Board of Regents Insurance Plans. However, the fiscal impact cannot be estimated at this time, but may be significant.

The fiscal impact to the DAS to conduct the analysis and complete the report required by the Bill cannot be determined.