Blog | Consumerism

Analysis: CBO says surprise-bill legislation reduces the deficit

Blog | Consumerism

Analysis: CBO says surprise-bill legislation reduces the deficit

  • The CBO report released July 16 projects that over a 10-year period the Senate Help Committee’s legislation related to surprise bills would reduce the federal deficit by approximately $25 billion.
  • The CBO assumes moving to a geographic median create downward pressure on payment rates to physicians.
  • Given the projected negative impact to physician payment rates, it’s not surprising there is strong support from the industry for an arbitration provision.

The Congressional Budget Office is projecting that over a 10 year (2019 – 2029) period, the Senate Help Committee’s legislation related to surprise bills (Title I of the Lower Health Care Costs Act) would reduce the federal deficit by approximately $25 billion. Reduced federal spending on exchange subsidies accounts for $1 billion of the deficit reduction. The remaining $24 billion stems from increased tax revenue. Review the detailed CBO Cost Estimate report, released July 16, here.

Takeaway

The CBO assumes moving to a geographic median will allow health plans to put downward pressure on payment rates to physicians. Physicians will face the option of contracting at a lower rate or going out of network and receiving the geographic median.

As a result, the CBO believes the “average payment rates from the current-law average to the current-law median would cause the average rate to drop by 15 percent to 20 percent at the national level.” The analysis states that reduced payment rates to physicians will result in lower premiums, which will translate into employers giving employees raises. This will increase tax revenue for the treasury.

Given the projected negative impact to physician payment rates, it’s not surprising there is strong support from the industry for an arbitration provision. On July 17, the House Energy and Commerce Committee advanced its version of surprise bill legislation, the No Surprises Act. It included an amendment that adds arbitration for claims over $1,250 when either a health plan or provider disagrees with the geographic-median payment rate.

The next step for bills in both chambers is a floor vote. However, neither chamber has a vote scheduled as of July 22. 

About the Authors

Chad Mulvany, FHFMA

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office, and a member of HFMA’s Virginia-Washington, D.C., Chapter.

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