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Report No: 532
Date: 12/07/2000

OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

  1. LAW NUMBER: P.L.106-417 (S. 406)

  2. BILL TITLE: Alaska Native and American Indian Direct Reimbursement Act

  3. BILL PURPOSE: Establishes a permanent program that allows all tribes, tribal organizations, and Alaska Native health organizations that operate Indian Health Services (IHS) hospitals and clinics to directly bill medicare, medicaid, and other third party payers.

  4. OMB ESTIMATE: In 1998, the Indian Health Care Improvement Act Amendments authorized a demonstration project that allowed four tribally-operated IHS facilities to directly bill the medicare and medicaid programs and other third party payers rather than submit their claims through the IHS. Under the direct billing system, payments to the demonstration participants were higher due both to quicker reimbursement and improved claims processing. P.L. 106-417 makes the program permanent and expands it to include all Indian tribes, tribal organizations, and Alaska Native health organizations that operate IHS facilities. OMB estimates that the Act will increase direct spending by $47 million over 5 years.
    5. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Net costs............... 0 4 5 10 13 15

  5. CBO ESTIMATE:
    6. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Net costs............... 0 9 8 8 8 8

     

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. In 2001 and 2002, OMB estimates lower net costs than CBO because it assumes that facilities will be slower to switch to direct billing. In subsequent years, OMB assumes more induced billing as a result of the shift and higher growth rates, yielding higher costs under OMB pricing.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Outlay effect.............. 34 1,153 2,184 7,151 7,852 8,024
    Receipt effect............ -8 -689 -808 -870 -922 -924
    Net costs.................... 42 1,842 2,992 8,021 8,774 8,948

    *$500,000 or less.

    NOTE: The cumulative effect of direct spending and revenue legislation enacted to date is currently estimated to result in an end-of-session sequester. The Administration looks forward to working with the Congress to ensure that an unintended sequester does not occur.