House passes bill to stave off millions in Medicare sequester cuts

(Photo by joe daniel price/Getty Images)

The House passed a bill on Friday to extend the moratorium on 2% Medicare payment cuts caused by a federal budget sequestration and avert $36 billion in payment cuts triggered by the American Rescue Plan.

Legislators voted 246 to 175 to pass H.R.1868, which postpones Medicare sequester payment cuts until the end of the year and exempts the budgetary effects of the $1.9 trillion COVID-19 relief bill from the Statutory Pay-As-You-Go Act of 2010.

Hospitals, physicians and other providers have expressed their relief.

"America's hospitals and health systems thank the U.S. House of Representatives for passing legislation today that extends relief from pending Medicare cuts to doctors and hospitals that are slated to resume at the beginning of next month," said Rick Pollack, president and CEO of the American Hospital Association.

The bill now moves to the Senate, where it needs 60 votes to pass before the current moratorium ends on March 31.

WHY THIS MATTERS

Budget sequestration is the automatic and uniform reduction of certain mandatory federal spending and is typically implemented to help achieve budgetary goals, according to a Congressional Research Service report.

Under the Budget Control Act of 2011, the federal budget was scheduled to undergo cuts of more than a trillion dollars over a nine-year period, which resulted in 2% annual Medicare payment cuts.

However, Congress delayed those cuts during the pandemic through the Coronavirus Aid, Relief and Economic Security Act. The period initially ran through the end of 2020, and then until March 31, 2021.

But in the recent passing of the American Rescue Plan, provider groups were disappointed that the act didn't include an extension to the moratorium.

Industry groups also raised concerns over additional payment cuts that would go into effect with the relief bill's passage because of a PAYGO statute reduction in Medicare spending of 4% next year, totaling $36 billion.

The Pay-As-You-Go Act of 2010 requires that new legislation changing taxes, fees or mandatory expenditures must not increase projected deficits. If any does, automatic across-the-board cuts in selected mandatory programs must be made, according to the Office of Management and Budget.

The American Medical Association sent a letter in early March to Congressional leaders urging them to take action against the Medicare payment cuts and to prevent the "imminent threats to the financial viability of physician practices."

In passing this bill, the sequester payment cuts will be delayed another nine months, and PAYGO budget cuts associated with the COVID-19 relief bill will be avoided.

The American Hospital Association expressed its thanks to the House for passing the bill, and directed its focus towards getting it passed in the Senate.

THE LARGER TREND

Aside from these potential cuts in Medicare spending, providers were already experiencing lower-than-normal payments, according to an AMA report.

It found that Medicare Physician Fee Schedule spending dropped as much as 57% below expected amounts between March and April 2020. And although Medicare spending on physician services partially recovered from the April low, it was still 12% less than what was expected by the end of June 2020.

The healthcare industry as a whole could face as much as $323 billion in losses because of the pandemic, according to projections from the AHA.

ON THE RECORD

Rick Pollack, president and CEO of the American Hospital Association said, "Hospitals, health systems and our heroic caregivers remain on the front lines of the COVID-19 pandemic, caring for patients and communities and playing a leading role in vaccination efforts.

"Now is not the time to pull resources away from these critical efforts. We now look forward to working with the U.S. Senate to achieve relief from the pending Medicare sequester cuts before they go into effect."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org