The federal government under the Trump administration has turned its focus to cutting costs, and a new report from the Blue Cross Blue Shield Association highlights policy efforts it says could save nearly $1 trillion in healthcare costs over the next decade.
The road map includes 10 policy proposals for stakeholders to consider, and BCBSA said these changes could drive federal savings of $524 billion, lower private insurance premiums by $389 billion and save patients $180 billion out-of-pocket.
The largest potential area for savings, according to the analysis, is to adopt site-neutral payments in Medicare, which the paper estimates would save $484 billion over 10 years. The report also suggests that mandating a different provider identifier for off-campus facilities than what’s required for on-campus facilities could save an additional $11 billion.
Hospital outpatient departments are currently exempt from site-neutral payments based on current law, and the costs there are a key focus for the team, said Kris Haltmeyer, vice president of legislative and regulatory policy at BCBSA, in an interview with Fierce.
“And what we see is when hospital systems take over physician practices, they increase the cost substantially,” he said. “So people are getting services from the same doctor, but the name on the office has changed, and cost can be three, three to five times higher in those HOPDs.”
The report’s savings estimate is based on a 2024 report from the Congressional Budget Office, which estimated that requiring site-neutral payments in Medicare would save $159.6 billion between 2025 and 2034. The BCBSA report extrapolates that to the higher tally by projecting the cost savings that could generate in the private market.
Private insurers frequently follow Medicare’s lead on policy and would likely want to take similar steps. If Medicare were to implement site-neutral payments, it would give private insurers greater leverage to negotiate similarly, according to the report.
Given that hospitals generally charge commercial insurers far more than they do Medicare, there is significant opportunity for savings here, according to the report.
Other provider-focused recommendations in the report include enhancing antitrust enforcement in the provider space, which it estimates would save $78 billion, and prohibiting anti-tiering provisions in payer-provider contracts, which could save $16 billion.
Requiring that hospitals report administrative costs and setting new cost efficiency standards could generate $40 billion in savings, while requiring that providers participate in two-sided risk for Medicare payment models could save $54 billion, according to the report.
David Merritt, senior vice president of external affairs for BCBSA, told Fierce that the team is seeing bipartisan interest in hospital billing, and, given the focus on cost savings right now, there’s potential to move the needle.
“Hospitals account for more than half of all premium dollars in the country,” he said. “So by bringing those underlying costs down, it actually helps.”
The remaining recommendations focus on drug costs and reforms for the pharmaceutical industry. The most lucrative proposals in the report include eliminating the ability for drugmakers to deduct spending on direct-to-consumer spending on their taxes, which could generate $137 billion in savings.
The report also projects that shortening the exclusivity period for biologic drugs to seven years from 12 years could save $134 billion. Reining in drugmaker tactics to delay the entry of biosimilar drugs to the market could also lead to $53 billion in savings, according to the report.
Merritt said that while the report’s recommendations form a solid foundation for reform, there is still potential to find new avenues for savings around prescription drugs and hospital costs and transparency. Given the costs associated with these two areas, they’re key focuses for employers and other plan sponsor clients, he said.
“There are a lot of areas of alignment, because they’re the ones that often bear the brunt of these higher costs,” he said. “Our goals remain the same: We want to get as many people covered at the lowest possible cost, with access to high-quality care. So we think that there’s a good opportunity now to have a really serious conversation about driving costs out of the system.”