Healthcare Business News
HHS Secretary Kathleen Sebelius

HHS braces for sequester cuts

By Jessica Zigmond
Posted: February 22, 2013 - 2:45 pm ET

HHS is bracing itself for the automatic federal budget cuts set to take effect next week, but it does not have a projection of how many department employees will be affected by the spending reductions.

Unless Congress reaches a budget agreement by March 1, $85 billion in spending cuts to defense and nondefense programs will kick in for the remainder of the fiscal year, which ends in September. Known as sequestration, the budget reductions are part of the $1.2 trillion in across-the-board spending cuts to federal programs over 10 years that Congress agreed to in the Budget Control Act of 2011. As part of the American Taxpayer Relief Act passed last month, Congress agreed to delay sequestration—which was scheduled to start Jan. 2—until March 1. Federal departments are preparing for the cuts to happen; earlier this week, the Defense department announced plans to furlough most of its civilian workforce of about 800,000 employees in late April.

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“HHS is working to prepare for the possibility of these reductions in a way that tries to minimize the negative impacts on HHS' mission,” an HHS spokesman said in an e-mail. “HHS does not have final plans or estimates of the impacts on its federal employees at this time.”

HHS Secretary Kathleen Sebelius sent a letter (PDF) to the Senate Appropriations Committee earlier this month that detailed how sequestration will affect social services, public health, medical research and healthcare coverage for Americans. For instance, Sebelius noted that the Food and Drug Administration would conduct about 2,100 fewer domestic and foreign facility inspections of firms that make food products, which could increase the risk of safety incidents such as food-borne illnesses. The cuts would also lead to about 3,000 fewer inpatient admissions and 804,000 fewer outpatient visits in Indian Health Service and tribal hospitals and clinics. And Sebelius highlighted the anticipated 2% payment cut to Medicare providers, health plans and drug plans, which she said will lead to “billions of dollars in lost revenues” to Medicare physicians, hospitals and other providers.

Meanwhile, the National Association of Community Health Centers announced Friday that these facilities face a potential loss of about $120 million through sequestration. According to the organization, those spending reductions could cause about 900,000 community health center patients to lose services and force some centers to close. In a statement, Dr. Gary Wiltz, the association's board chair elect, said the arbitrary cuts will have a “ripple effect.”

“Every community that a health center serves will be adversely affected in some way,” Wiltz said. “Current patients, many of whom have chronic conditions and need on-going medical care, may lose access to the low-cost primary care they know, or low-income families who have been waiting for a health center to open in their community might have to wait even longer, or they will just continue to go to the local emergency room for care.”

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