House BillHR 7895Fraud offenses and financial crimesHealth personnel
PBM Kickback Prohibition Act
INTRO MAR 12· LAST ACTION JUL 2
READING
3MIN
COSPONSORS
0
READER REACTIONS0 TOTAL
NO VOTES YET · BE THE FIRST
Introduced only
LEGISLATIVE PROGRESS
STEP 3 / 8
Introduced
In Committee
Reported
Passed House
Passed Senate
Conference
To President
Became Law
WHAT THE BILL DOES
AI-written
This bill matters because it targets a practice that many believe contributes to inflated healthcare costs and conflicts of interest. When PBMs pay referral fees, it can create an incentive for brokers or consultants to recommend a PBM that offers them the highest fee, rather than the PBM that provides the best value, lowest prices, or most appropriate services for the health plan and its members.
If this bill becomes law, it could lead to more open and competitive negotiations between health plans and PBMs, potentially driving down administrative costs related to prescription drug benefits. This, in turn, could translate to lower premiums, co-pays, or other out-of-pocket expenses for individuals, or simply better benefits from their employer-sponsored health plans. If it doesn't pass, the current system of PBMs paying referral fees would likely continue, leaving open the possibility of choices being influenced by these payments rather than pure cost and quality.
KEY PROVISIONS
3AI-extracted
PROVISION 01
Prohibits pharmacy benefit managers (PBMs) from paying any compensation to brokerage firms, brokers, consultants, advisors, or any other individual for referring a health plan's or health insurance issuer's business.
This aims to eliminate conflicts of interest and promote transparency in how PBMs are selected by health plans.
PROVISION 02
Amends Section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 (ERISA) to include this new prohibition.
Integrates the new rule into existing federal law governing most private sector health and retirement plans, providing a legal framework for enforcement.
PROVISION 03
Specifies that the amendment applies to plan years beginning after the date the Act becomes law.
Provides a clear effective date, allowing health plans and PBMs time to adjust their existing contracts and practices to comply with the new rule.
This bill matters because it targets a practice that many believe contributes to inflated healthcare costs and conflicts of interest. When PBMs pay referral fees, it can create an incentive for brokers or consultants to recommend a PBM that offers them the highest fee, rather than the PBM that provides the best value, lowest prices, or most appropriate services for the health plan and its members.
If this bill becomes law, it could lead to more open and competitive negotiations between health plans and PBMs, potentially driving down administrative costs related to prescription drug benefits. This, in turn, could translate to lower premiums, co-pays, or other out-of-pocket expenses for individuals, or simply better benefits from their employer-sponsored health plans. If it doesn't pass, the current system of PBMs paying referral fees would likely continue, leaving open the possibility of choices being influenced by these payments rather than pure cost and quality.
KEY PROVISIONS
AI-extracted
high
Prohibits pharmacy benefit managers (PBMs) from paying any compensation to brokerage firms, brokers, consultants, advisors, or any other individual for referring a health plan's or health insurance issuer's business.
This aims to eliminate conflicts of interest and promote transparency in how PBMs are selected by health plans.
med
Amends Section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 (ERISA) to include this new prohibition.
Integrates the new rule into existing federal law governing most private sector health and retirement plans, providing a legal framework for enforcement.
low
Specifies that the amendment applies to plan years beginning after the date the Act becomes law.
Provides a clear effective date, allowing health plans and PBMs time to adjust their existing contracts and practices to comply with the new rule.
The prohibition on kickbacks applies to plan years
GLOSSARY
AI-written
Pharmacy Benefit Manager (PBM)
A company that manages prescription drug benefits on behalf of health insurers, Medicare Part D plans, large employers, and other payers. They negotiate with drug manufacturers and pharmacies to control drug costs.
Kickback
An illegal payment, fee, or item of value offered in exchange for a referral or for facilitating a transaction, often used to improperly influence a business decision.
Employee Retirement Income Security Act of 1974 (ERISA)
A federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to protect individuals in these plans.
Covered plan
An employee benefit plan, such as a health plan, that falls under the regulations and protections of the Employee Retirement Income Security Act (ERISA).
Referral
The act of directing a business or client to another business or service provider, often in exchange for a fee or other benefit.
Compensation
Money or other benefits received by an individual or entity in exchange for services rendered or as payment for a transaction.
Brokerage firm
ACTION TIMELINE
8 EVENTS
JUL 2
Reported (Amended) by the Committee on Education and Workforce. H. Rept. 119-729.
COMMITTEE
JUL 2
Placed on the Union Calendar, Calendar No. 634.
CALENDARS
MAY 21
Committee Consideration and Mark-up Session Held
COMMITTEE
MAY 21
Ordered to be Reported (Amended) by the Yeas and Nays: 34 - 0.
A company that buys and sells financial instruments on behalf of clients, or in this context, helps connect clients (like health plans) with service providers (like PBMs).
