CBO and Moody’s release estimates of savings, costs of surprise medical bill legislation

Wednesday, July 24, 2019

A U.S. Senate bill aimed at protecting patients from surprise medical bills could also save the federal government about $7.5 billion over the next decade, according to estimates released July 16 by the Congressional Budget Office (CBO).

CBO estimates that under the sweeping Lower Healthcare Cost Act of 2019 the federal government would have to spend about $18.6 billion through 2029, primarily for additional funding for community health centers and other federal programs. However, that outlay would be more than offset by about $26.2 billion in savings generated by reduced federal subsidies for healthcare and health insurance, CBO says. The bill cleared the Senate Health, Education, Labor, and Pensions Committee in late June on a bipartisan vote, and bill sponsor Sen. Lamar Alexander, R-Tennessee, hopes to have it passed on the Senate floor and signed by President Donald Trump by the end of July.

In addition to addressing surprise medical bills, some of the Lower Healthcare Cost Act's 55 proposals would also:

  • Allow cheaper generic or biosimilar drugs to enter the market earlier
  • Extend funding for community health centers and other federal healthcare programs
  • Impose new rules on contracts between insurers, providers, and pharmacy benefits managers
  • Improve consumer access to healthcare cost and quality information
  • Prohibit some medical billing practices

 

The CBO provided some caveats with their estimates, noting that it would be difficult to gauge the effect of provider and payer responses to the bill's provisions, or how well federal and state agencies would be able to implement the law.

In June, Moody’s Investors Services weighed in on the financial impact proposed surprise medical bill solutions would have on hospitals. In a Moody’s Investors Report, it stated that most proposed solutions to surprise medical bills will negatively affect provider organizations. However, even in the absence of a solution, the growing awareness of the scope and impact of surprise medical bills will harm providers’ relationships with patients.

Because reducing or ending surprise medical billing has wide bipartisan support, it’s likely that some legislative or regulatory change will be made at the federal level, the Moody’s report says. Of the solutions proposed, bundled billing—requiring a single bill for all care received in an emergency department (ED)—or requiring hospitals to guarantee that all affiliated practitioners are in-network would have the most negative impact on hospitals. Many hospitals outsource all ED operations and billing to staffing companies, and many practitioners aren’t employed or controlled by hospitals, according to the report.

Large providers would be least affected by any changes, but smaller hospitals and other service providers such as physician staffing companies could bear the brunt of the impact, the report says. Any legislation may have unintended effects on how in-network rates are negotiated and may lead to more consolidation as smaller providers seek to become part of larger in-network providers.

Even as legislation progresses at the federal level, some states have already taken steps to address surprise medical bills. More than 20 states, including New York and recently Texas, have passed laws that shield patients from surprise medical bills.

Editor’s note: Information in this article originally appeared on HealthLeaders and Revenue Cycle Advisor.

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Billing and Claims, News, Revenue Integrity

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