Healthcare Business News

Providers hang back on pushing for sequester fix

By Rich Daly
Posted: June 20, 2013 - 5:45 pm ET

Despite two months of pain induced by Medicare cuts under the deficit-reduction law triggered this year, advocates for hospitals and physicians are waiting until fall to push a legislative fix.

The dire warnings before the 2% cuts in Medicare payments hit April 1 have given way to watchful waiting.

“In terms of mainstream policymaking, we're in a quagmire right now until we get to event-making policies that have to be dealt with, like the debt ceiling and government spending for 2014,” said Chip Kahn, president and CEO of the Federation of American Hospitals.

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Kahn and other health policy experts see a possibility that the large fiscal policies that Congress will need to address in the fall could include a deal to replace the sequester, which was required by the Budget Control Act of 2011. That law requires nearly $1 trillion in nine-year cuts, including about $100 billion from Medicare, according to the Congressional Budget Office.

The CMS began reducing provider payments for services delivered after March 31, and the Office of Management and Budget estimates those reductions will deliver $11.35 billion in savings by Oct. 1.

Three months before the cuts under the sequester were scheduled to begin—Congress pushed it back three months from Jan. 1—three of the largest provider groups released a report predicting that those cuts alone would kill more than 750,000 healthcare jobs by 2021. But so far, several healthcare industry groups said they have no plans to follow up and see if the predicted job losses—including nearly 93,000 hospital jobs—are materializing.

“It has coincided with data showing a slowdown in hospital hiring and healthcare spending, but it's not to say that one is causing the other,” said Alex Brill, who tracked sequestration's impacts on providers as a policy consultant for the Hooper, Lundy & Bookman, law firm.

At least one industry group—the National Hospice and Palliative Care Organization—is planning a formal study to quantify the impacts, which is due this summer.

“Hospices are somewhat unique because so much of their revenue comes from Medicare and Medicaid,” said Jonathan Keyserling, a senior vice president for NHPCO.

Perhaps not surprising, the healthcare effects have received relatively little attention in Congress. The only legislation to gain any attention was a bill from Rep. Renee Ellmers (R-N.C.) that aims to pad the blow to community cancer clinics, which have said the cuts will compel them to turn patients away because they're losing money on the drugs they administer. But even that small scale reversal has yet to advance far.

Even as provider advocates wait for a major legislative “vehicle” this fall, a big obstacle remains: Finding money to replace the deficit reduction accomplished under the sequester. Democratic proposals for tax increases have run into Republican opposition. Another potential complication is that alternative Medicare reductions proposed by Republicans and under President Barack Obama's budget could cut Medicare providers even more deeply.

Also, the sequester didn't hit Medicare as hard as other parts of federal government, so providers' woes could sink to the bottom of legislators' priority list.

“Overall, there's not been a huge uproar around the Medicare sequester and certainly not the uproar that was predicted before it went into effect,” Brill said.

Follow Rich Daly on Twitter: @MHrdaly

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