Health groups decry sequester; Obama signs order

(Story updated at 9 p.m. ET)

As expected, President Barack Obama on Friday signed an order for sequestration (PDF) that sets in motion the automatic federal budget cuts outlined in the Budget Control Act of 2011.

Along with the executive order, the Office of Management and Budget sent an 83-page sequestration report to Congress (PDF) that includes calculations and percentages on how budget resources will be reduced. Earlier Friday, the president met with congressional leaders and later said the nation will get through the period of sequestration, but it will be painful process.

“This is not going to be an apocalypse, I think, as some people have said,” the president said during a news conference at the White House. “It's just dumb. And it's going to hurt. It's going to hurt individual people and it's going to hurt the economy overall.”

Despite strong lobbying efforts from the nation's physicians, hospitals, healthcare associations and other industry groups, Congress was unable to pass legislation to replace the automatic, across-the-board spending cuts that were established in the Budget Control Act of 2011 as a way to help reduce the federal deficit. The mandatory, arbitrary cuts, which neither political party favored, were put in place to force both sides to reach a grand bargain that would reduce the federal deficit, but no such deal has been realized. The order Obama signed cancels about $85 billion in federal budget resources for the remaining seven months of the fiscal year, according to a memo from the Office of Management and Budget.

Medicare providers are bracing themselves for payment reductions—which the Budget Control Act capped at 2%—for services provided on or after April 1. An HHS spokesman confirmed that the Balanced Budget and Emergency Deficit Control Act of 1985 states that Medicare payment cuts are delayed until the first day of the first month after a sequester has been ordered. For Medicare Advantage (Part C) and drug plans (Part D), “CMS is prepared to take sequestration into account when they calculate the April monthly payment amount for Part C and D plans on March 21 and communicate the amount to plans on March 22,” the spokesman said in an e-mail.

In a statement, AMA President Dr. Jeremy Lazarus said Medicare patients and physicians will “now feel real pain” in the form of new cuts after Congress failed to act.

“The across-the-board cut will hit physicians particularly hard because of the fundamentally flawed Medicare physician payment system,” Lazarus said in a statement Friday. “Since 2011 Medicare payments for physician services have only increased by 4%, while the cost of caring for physicians has gone up by more than 20%,” he continued. “A 2% cut widens the already enormous gap between what Medicare pays and the actual cost of caring for seniors.”

Striking a similar note, the MGMA-ACMPE emphasized that the sequestration cuts worsen an already troubled payment system for the nation's doctors.

“MGMA is disappointed in Congress' failure to prevent across-the-board sequestration cuts, which will impact payments to physicians and compound the already dire situation for medical group practices caused by the sustainable growth-rate formula,” Dr. Susan Turney, MGMA-ACMPE president and CEO, said in a statement. “This arbitrary and formulaic approach destabilizes Medicare at a time when Congress should be focused on implementing policies to achieve a high-performing patient-centered program.”

The American Public Health Association released a statement that said a projected 5% reduction in resources to HHS' Centers for Disease Control and Prevention, the Health Resources and Services Administration and other public agencies translates to cuts to state and local communities for essential public health programs. “Sequester means 424,000 fewer HIV tests conducted by the CDC's health department grantees, 7,400 fewer patients having access to HRSA's AIDS Drug Assistance Program that provides life-saving HIV medications and about 25,000 fewer breast and cervical cancer screenings for poor, high-risk women,” Dr. Georges Benjamin, executive director of the APHA, said in a statement.

The California Medical Association released a fact sheet (PDF) to help its members understand the effects of sequestration. The association estimates California will lose about $12.4 million to help prevent and treat substance abuse and about $2.6 million in funds that would go toward responding to public health threats such as infectious diseases, natural disasters, and biological, chemical, nuclear and radiological events.

Meanwhile, the OMB's memo to federal agencies focused on responsibilities to implement the sequester. In it, the OMB estimated that the $85 billion in cuts through late September will result in about a 9% reduction for nondefense programs and a 13% cut for defense programs. The memo noted that agencies heighten their scrutiny over areas such as hiring new personnel, issuing discretionary monetary awards to employees, and approving any new training, conferences and travel for employees. An HHS spokesman said in an e-mail Friday that the department does not have final plans or estimates on how the sequester will affect its employees.

On Thursday, House Speaker John Boehner (R-Ohio) said “it's embarrassing” that the Democratic-controlled Senate has failed to pass any legislation to replace the sequester. On Thursday, the upper chamber failed to pass both Republican and Democratic-sponsored sequester-replacement bills.

“Republicans in the House passed legislation almost a year ago in May, and again in December, to avert the president's sequester and help put us on a path to a balanced budget,” Boehner said. “Now that today's political stunt to raise taxes has failed, it's time for the president and Senate Democrats to do the hard work that is necessary to pass a bill in the Senate so we can begin to resolve this issue.”

In his news conference Friday, the president reiterated his earlier call for congressional leaders to take a balanced approach—which would include increased taxes and spending cuts—to lower the federal deficit.

“The problem that we have is a long-term problem in terms of our healthcare costs and programs like Medicare,” the president said in a news conference. “And what I've said very specifically, very detailed, is that I'm prepared to take on the problem where it exists—on entitlements—and do some things that my own party really doesn't like if it's part of a broader package of sensible deficit reduction,” he continued. “So the deal that I've put forward over the last two years, the deal that I put forward as recently as December is still on the table. I am prepared to do hard things and to push my Democratic friends to do hard things.”