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The nonpartisan Congressional Budget Office (CBO) says that Senate bill 1895 to tackle surprise medical bills and high drug prices would save the federal government about $7 billion over the next 10 years.

The estimate released Tuesday could help the package’s chances for passage through the Senate by easing concerns over the impact on the deficit.

This money saving bill would:

  • Protect patients from surprise medical billing and reduce payments to some health care providers working in facilities where surprise bills are likely
  • Allow some generic or biosimilar drugs to enter the market earlier, on average, than under current law
  • Impose new rules for insurers’ contracts with pharmacy benefit managers and health care providers
  • Extend funding for community health centers and certain other federal health care programs
  • Increase access to health, cost, and quality information among patients, providers, and insurers, which would create new administrative responsibilities that increase costs for insurers and pharmacy benefit managers
  • Impose intergovernmental and private-sector mandates by prohibiting certain medical billing practices, limiting other commercial activities, and prohibiting the sale of tobacco products to anyone under the age of 21, among many other duties


Alternative proposals that might have called for arbitration, a tactic for addressing surprise bills, which has been heavily backed by providers, is not addressed in this analysis.

The CBO estimates this legislation would increase federal spending by about $18.7 billion and increase revenue by $26.2 billion from 2019 to 2029, resulting in savings of $7.6 billion.

“That estimate accounts for effects on federal subsidies for insurance purchased through the marketplaces and for the effects that arise from lower premiums for employment-based insurance,” the CBO stated.

The bill, introduced by Senate health committee Chairman Lamar Alexander, R-Tenn., and ranking member Patty Murray, D-Wash, also aims to boost transparency on drug prices as well as address surprise billing.

A majority of the increased federal revenue would come from the portion of the legislation that targets surprise medical bills. The legislation calls on insurers to pay a median in-network rate for out-of-network care for surprise bills. It would also ban balance billing, a practice where a provider bills the patient for any difference between the insurer payment and the provider’s charges.

CBO estimates that the surprise medical bill portion would increase revenue by $23.8 billion and reduce direct spending by $1.1 billion for total savings of $24.9 billion through 2029.

“That estimate accounts for effects on federal subsidies for insurance purchased through the marketplaces and for the effects that arise from lower premiums for employment-based insurance,” the CBO stated.

The CBO stated that the strategy employed in the bill would carry some additional costs for insurers such as the cost of calculating the median in-network rates. Still, it says premiums would decline because the bill would require insurers to reimburse out-of-network providers through their own median rates for an in-network provider.

CBO also estimates that there will be a small decline in number who claim the itemized medical tax deduction, which would boost federal revenue.

The second major portion of the legislation would modify the Food and Drug Administration’s regulatory framework for approving drugs and biologics.

The legislation would incorporate the CREATES Act, a bill that would improve the ability of generic and biosimilar drug companies to sue brand-name companies for denying samples for FDA-required testing.

A major increase in federal spending under the estimate is the extensions for funding for community health centers, the Indian Health Services and several other federal programs. Overall these extensions will increase the deficit by $24.3 billion through 2029.

But other savings and increased revenue throughout the package will on net decrease federal spending by $7 billion over the next decade. VTN


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Larry Storer

Larry Storer

Larry Storer has been editor of Vein Therapy News for 10 years. He has edited computer, shelter and medical publications at Publications & Communications LP for 30 years. He was also a corporate vice president and editorial director before retiring. Larry graduated from Baylor University with a BA in journalism and an MA in communications; and from Lamar University with a MED in school administration. He taught beginning and advanced reporting, beginning and advanced editing and editorial writing at Baylor University. Larry was a reporter, and city and news editor of the Beaumont Journal, and opinion editor at the Beaumont Enterprise and Beaumont Enterprise-Journal. He was also the founding managing editor of the Yuba City (California) Daily Independent-Herald.