Healthcare Business News

Senate Dems' plan to avoid health cuts seen as DOA in House

By Rich Daly
Posted: February 15, 2013 - 7:30 pm ET

Senate Democrats floated a new plan to avoid cuts to Medicare and other health programs, but it stands little chance of succeeding.

The American Family Economic Protection Act (PDF) was introduced Feb. 14 to replace the 2% Medicare provider and insurer cuts scheduled to begin March 1 along with a series of tax increases and cuts to agricultural and defense programs.

The bill would delay the start of all scheduled sequester cuts—including those to Medicare—until Jan. 2, 2014.

The bill was offered by Senate Democratic leaders and quickly won the backing of the Obama administration. But it was see as dead on arrival in the Republican-led House of Representatives, because of its tax increases.

“They're not going to be able to align both houses to find relief there,” said one health industry source.

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“We're pleased that they are eliminating the 2% Medicare cut,” said Marie Watteau, a spokeswoman for the American Hospital Association. “We are also pleased they have identified other sources of funding than additional cuts to Medicare and Medicaid.”

Health insurers are worried that the sequester's 2% cuts to the Medicare Advantage program will compound the effect of $200 billion in coming cuts to those plans already authorized under provisions of the Patients Protection and Affordable Care Act, said Robert Zirkelbach, a spokesman for America's Health Insurance Plans.

The sequester already was delayed once by a year-end budget deal. The American Taxpayer Relief Act of 2012 put off the start of the sequester by two months and reduced the total cut to federal spending in 2013 to $85 billion from $109 billion.

Ken Perez, director of healthcare policy at MedeAnalytics, said applying a similar 22% decrease to the Medicare components indicates the program will face about $9 billion in cuts this year.

“We estimate that Medicare Part A would be cut by roughly $4.5 billion, and depending on how that cut is apportioned between hospitals, skilled nursing facilities and other providers, for the remainder of this year this could translate into a reimbursement cut of $0.8 million to $1.3 million for the average hospital,” Perez said. “Medicare Part B reimbursements could be reduced by as much as $4.1 billion, and depending on how that reduction is apportioned between physicians, the Hospital Outpatient Prospective Payment System and other providers, this could translate into a 3 to 4% reduction to the Physician Fee Schedule.”

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