Senators Say Bill Would Spur Reducing Administrative Costs Across Health Care System by at Least 50 Percent Over Next Decade

WASHINGTON, D.C. [05/01/19]—Today, U.S. Senators Tina Smith (D-Minn.) and Bill Cassidy, M.D. (R-La.) introduced bipartisan legislation to help develop innovative ways to reduce unnecessary administrative costs in health care spending.

Estimates suggest that while administrative costs could account for over one quarter of total health care spending in the United States, much of it is not directly related to delivering patient care. Sens. Smith and Cassidy’s bill—the Reducing Administrative Costs and Burdens in Health Care Act, which was first introduced last Congress—would direct the Secretary of Health and Human Services to take steps toward reducing unnecessary administrative costs across the health care system by at least 50 percent. It would also provide support for states to tackle this challenge at the local level.

“Our bipartisan bill aims to reduce health care costs by calling on the federal government to eliminate unnecessary costs and administrative burdens,” said Sen. Smith. “Cutting out administrative waste can improve patient care and reduce the hassle health care providers face when delivering quality care for people in Minnesota and across the country. Our bill builds off important work already underway in states to cut wasteful spending while upholding high-quality patient care.”

“We should spend money making people healthy, not on administrative waste,” said Dr. Cassidy. “We need to lower health care costs for American families and this bill is an important step.”

“Minnesota has been a leader in reducing health care administrative costs and burdens, but more work is needed,” said Jan Malcolm, Minnesota Commissioner of Health. “Senators Smith and Cassidy’s bill provides the right national framework, coordination, and resources to redirect vital health care dollars from current wasteful administrative activities to the best use of those dollars—quality patient care and improved health outcomes.”

The Reducing Administrative Costs and Burdens in Health Care Act will reduce administrative costs by:

· Reducing federal spending on health care administration by requiring the federal government to develop and execute on a plan to reduce administrative costs across the health care system by at least 50 percent over the next decade, without affecting the quality of care;

· Supporting state-level innovation by providing resources to curb administrative costs in key areas, including physician and hospital credentialing, the use of and exchange of data, and compliance measures. The bill also provides support to accelerate the adoption of new technologies that will support the integration of clinical and administrative systems.

You can read a summary of the bill here.

As a member of the Senate Health Committee and a leader in the bipartisan Rural Health Caucus, a top priority for Sen. Smith is addressing the high cost of health care. In addition to introducing theReducing Administrative Costs and Burdens in Health Care Act, Sen. Smith recently teamed up with Sen. Cassidy to also push legislation focused on bringing lower-cost insulin to market. Their bill—the Protecting Access to Biosimilars Act—would codify a new Food and Drug Administration (FDA) pathway for insulin to come to market, thus increasing market competition and driving down the cost of the life-saving medicine.

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