Healthcare Business News
Chip Kahn, President and CEO, Federation of American Hospitals

Providers oppose House sequester measure

By Jessica Zigmond
Posted: December 20, 2012 - 5:15 pm ET

Healthcare providers are lining up against legislation the House will vote on Thursday that would replace part of the mandatory federal spending reductions scheduled for 2013 while maintaining billions in Medicare cuts.

As part of the ongoing fiscal-cliff negotiations, House Majority Leader Eric Cantor (R-Va.) introduced the Spending Reduction Act of 2012 (PDF), which would supplant one year of the sequester—the across-the-board spending cuts to defense and nondefense programs outlined in last year's Budget Control Act—with other spending cuts and an additional $200 billion in savings over 10 years. Payment cuts to Medicare, which the Budget Control Act capped at 2%, are scheduled to take place in early February, and Cantor's bill keeps those reductions in place.

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The legislation is similar to a bill the lower chamber passed in May to avert the sequester.

“The Federation of American Hospitals supports postponing the Budget Control Act's (BCA) mandated sequestration,” Chip Kahn, president and CEO of the Federation of American Hospitals, said in a statement. “However, we strongly oppose H.R. 6684, which postpones only a portion of the BCA sequestration while leaving intact $11 billion in Medicare sequestration cuts in FY13 alone and imposing more than $15 billion in new Medicaid cuts.”

Mark Parkinson, president and CEO of the American Health Care Association and the National Center for Assisted Living—which represents the nation's nursing homes and assisted-living providers—sent a letter to House members urging them to vote against the bill, which would also reduce the Medicaid Provider Assessment to 5.5% from its current level of 6%. Providers pay that tax to states to help fund their Medicaid programs.

“This change will make it even harder for states to finance a program that is already underfunding nursing providers by $7 billion in 2012,” Parkinson wrote.

The American Hospital Association reiterated that the automatic cuts to Medicare will cost thousands of U.S. jobs.

“While the proposal calls for eliminating the sequester cuts for defense and veterans' programs, the Medicare sequester would remain in place,” Richard Umbdenstock, president and CEO of the American Hospital Association (PDF), said in a statement. “As a result, more than 766,000 healthcare and related jobs could be lost by 2021, according to a report released by the AHA, American Medical Association and American Nurses Association. In addition, it would reduce Medicaid payments for disproportionate share hospitals, and restrict the Medicaid provider assessment program.”

Although Cantor said Thursday he expects the House to pass the legislation, Senate Majority Leader Harry Reid (D-Nev.) said he will not allow the Senate to take up the House sequester bill because it would not survive a veto by President Barack Obama.

“We're not taking up anything they are working on over there right now,” Reid said at a Thursday news conference.

Instead, Reid urged House Speaker John Boehner (R-Ohio) to return to talks on a comprehensive year-end deal with Obama and resolve differences that left them “only a couple hundred billion dollars apart” on a large deal.

Separately, Sen. Charles Schumer (D-N.Y.), the third-ranking Democrat in the Senate, told reporters that a provision to avoid the looming 26.5% cut in Medicare physician payments “has to be included” in any final deal.

Also Thursday, the House will vote on the GOP's “Plan B” tax plan that would extend current tax rates for Americans who make $1 million or less. Boehner announced that plan earlier this week, but it not address sequestration, which Cantor's spending package does.

-with Rich Daly

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