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CBO Report Shows Senate’s Bipartisan Bill on Surprise Billing, Drug Prices, Transparency, and More Would Result in Deficit Decrease

On July 16, 2019, the Congressional Budget Office (“CBO”) released a Cost Estimate for Senate Bill S. 1895, the “Lower Health Care Costs Act.” The bipartisan bill, introduced June 19, 2019, intends to end surprise medical bills, reduce the prices of prescription drugs, improve transparency in health care costs, and increase public health awareness and access to health information.

The legislation would implement a number of reforms to the manner in which health care is currently provided. Among the sweeping and far-reaching changes proposed, key provisions include protections for patients from out-of-network expenses for services provided at in-network facilities; prohibitions on drug manufacturers delaying the market entry of generics or biosimilars; a ban on gag clauses on price and product information; a ban on anticompetitive terms in facility and insurance contracts that limit access to higher quality, lower cost care; and funding for a national public awareness campaign on the importance of vaccinations.

The CBO’s report indicates that the legislation, if enacted, would increase direct spending by about $18.7 billion but increase revenues by $26.2 billion, resulting in a net decrease in the deficit of $7.6 billion over the 2019-2029 period. The budgetary effects would primarily stem from reduced federal subsidies for health care and health insurance and increased direct spending for community health centers and other federal health programs. The CBO report notes that there are still areas of “significant uncertainty,” including accurately anticipating the nature and effects of provider and insurer responses to the bill’s provisions, accurately projecting how federal and state agencies would implement the law, estimating quantities, sales, and market effects of the introduction of new pharmaceutical products, and determining how increased transparency would affect prices and private insurance premiums.

As of the date of this post, the bill is on the Senate Legislative Calendar under General Orders after being reported to the Senate July 8, 2019.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume IX, Number 210


About this Author

Kathleen Stratton, Sheppard Mullin Law Firm, Washington DC, Corporate Law Attorney
Senior Counsel

Kathleen M. Stratton is Special Counsel in the Corporate Practice Group in the firm’s Washington D.C. office.

Areas of Practice

Kathleen Stratton represents health care industry clients in a range of matters focusing predominantly on regulatory compliance, licensure, certification, and operational issues facing a vast array of provider types. Over the past 30 years, her provider clients have included hospitals, specialty pharmacies, ambulatory surgery centers, durable medical equipment suppliers,...

Theresa E. Thompson, Sheppard Mullin Law Firm, Washington DC, Corporate Law Attorney

Theresa E. Thompson is an associate in the Corporate and Securities Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Ms. Thompson's practice focuses on such areas as health care fraud and abuse, particularly in matters relating to the civil False Claims Act, physician self-referral (Stark law), and anti-kickback issues, as well as telehealth and telemedicine. She has experience in government investigations, litigation, and regulatory compliance, including in response to government anti-fraud and abuse enforcement efforts and regulatory inquiries.

A contributing author for the American Health Lawyers Association's Health Care Reform Educational Task Force, Ms. Thompson received her J.D., with a Health Law Certificate, from the University of Maryland Francis King Carey School of Law, where she also served as the Manuscripts Editor of the Journal of Health Care Law and Policy, President of the Student Health Law Organization, and Treasurer of the Women’s Bar Association. She is a recipient of two CALI Excellence for the Future Awards—one for the study of Health Law Fraud and Abuse and the other for Written and Oral Advocacy—and was part of a team that won first place in the Fifth Annual Health Law Regulatory and Compliance Competition.