Blog: Sequestration Reaper is lurking

It's like watching a trailer to a horror movie. You know something bad is going to happen. You just don't know when.

A law enacted this week requiring sequester details within 30 days is expected to give Medicare providers new insights—or more likely nightmares—on the looming 2% cut to their payments.

The Sequestration Transparency Act of 2012, sign by President Barack Obama on Tuesday, requires the administration to provide detailed estimates within 30 days of the sources for the cuts required to begin in January 2013 under the Budget Control Act of 2011. The law requires $1.2 trillion in government-wide federal cuts over10 years, while exempting certain programs.

The new law's required estimates, down to the “program, project, and activity level,” will include greater detail on the maximum 2% annual cut in Medicare provider payments required by the law, a congressional source confirmed this week.

So far, the official projections on the extent of those Medicare cuts have applied only to the overall programmatic level. Those include a November 2011 estimate by the Congressional Budget office that the 2% sequester will cut $123 billion over 2013-2021 from Medicare provider and insurer payments (PDF).

Additionally, The Sequester—think the Grim Reaper with a copy of the federal budget in one hand—will cut unknown amounts from Medicare administrative functions, which could exceed the 2% statutory limit on provider cuts. Adding to the uncertainty surrounding the law was its lack of a definition of “administrative” costs, which would better define what parts of Medicare are outside the 2% limit or exempt from its cuts. The law barred any direct cuts to Medicare beneficiaries.

The uneven nature expected in the cuts among many non-provider healthcare functions of the federal government will likely produce instances of deeper cuts, on a percentage basis.

A July 25 report from Sen. Tom Harkin (D-Iowa), chairman of the Appropriations Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies, identified a range of deep non-defense cuts expected under sequestration (PDF). Examples of non-Medicare HHS cuts outlined in that report included an expected $2.4 billion sliced from the National Institutes of Health, or about 8% of its nearly $31 billion 2013 budget.

What nightmares are you having? Drop me a line at and I'll share the scariest with readers.

You can follow Rich Daly on Twitter @MHRDaly.



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