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Healthcare Business News

Budget deal would extend Medicare sequester cuts

By Jessica Zigmond
Posted: December 11, 2013 - 8:15 am ET

(This story has been updated with a correction.)

The nation's healthcare providers would endure an additional two years of Medicare sequester cuts under a two-year budget deal that Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.) announced Tuesday evening.

Ahead of a Dec. 13 deadline, the lead budget negotiators for the Senate and House unveiled an agreement that sets the federal government's 2014 spending level at about $1.012 trillion and provides about $63 billion in sequester relief over two years through savings elsewhere in the budget.According to a summary of the bill (PDF), the legislation would also provide $85 billion in mandatory savings, including about $28 billion over 10 years, by requiring the president to sequester the same percentage of mandatory savings—to Medicare and other programs—for an additional two years until 2023.

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"America's hospitals have grave concerns about the Murray-Ryan proposed budget agreement and urge Members of Congress to oppose it," Chip Kahn, president and CEO of the Federation of American Hospitals, said in a statement. "The budget agreement threatens access to critical healthcare services for seniors by trading off Medicare cuts for increases in government and defense spending today.”

Also included in the agreement is a provision that aims to prevent fraud and abuse in Medicaid, which Ryan's office estimated could save about $1.4 billion. According to a summary, the provision allows states to delay paying for suspect claims as long as the delay does not harm a beneficiary's access to care. It also would allow states to collect medical child support in cases where health insurance is available from a non-custodial parent and allows Medicaid to recoup costs from beneficiary-liability settlements.

The deal--which raises the 2014 spending level by about $45 billion above the current level of $986 billion--would also reduce the deficit by between $20 and $23 billion, according to Murray's office. It's the first budget agreement the parties have reached in a few years, and, if approved by Congress, would avert another government shutdown in mid-January. It also clears a path for the House and Senate Appropriations Committees to start negotiations on a final fiscal year 2014 package by Jan. 15, when the current continuing budget resolution expires.

Lawmakers are considering using the Ryan-Murray deal as a vehicle for a three-month extension of Medicare's current sustainable growth rate formula for paying physicians as well as extensions of certain Medicare programs, according to a healthcare consultant familiar with the negotiations. Those provisions could be attached to the agreement after the House passes it. Some options to pay for the temporary patch, estimated to cost about $7 billion, include rebasing Medicaid disproportionate share payments and establishing new criteria for long-term care hospitals.

The House of Representatives is expected to consider the agreement, called the Bipartisan Budget Act, before it moves to the Senate. In a statement Tuesday, President Barack Obama praised the leaders for finding a balanced approach that replaces a portion of the sequester through targeted fee increases and spending cuts. He also said that while he doesn't like everything about the agreement, it's a sign that Democrats and Republicans can break the recent cycle of what he called "short-sighted, crisis-driven decisionmaking.”

Follow Jessica Zigmond on Twitter: @MHjzigmond

This story has been updated to indicate the deal's $28 billion in mandatory savings over 10 years comes from extending the sequester cuts for Medicare and other mandatory programs through 2023.

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