Federal spending deal leaves looming Medicare cuts in place


Congressional leaders have struck a deal to avert a government shutdown, but they didn’t include a major priority for healthcare providers: preventing significant Medicare reimbursement cuts that are slated to take effect next month.

Medicare providers stand to lose about $36 billion in reimbursements stemming from a 4% cut set to take effect in January, according to the nonpartisan Congressional Budget Office.

The continuing resolution lawmakers will consider also does not address the 2% Medicare cuts dictated by the 2011 budget sequestration law that Congress postponed last year as part of the government’s response to the COVID-19 pandemic. Hospitals want Congress to continue the pause through at least next year. Lawmakers on Thursday didn’t detail concrete next steps but indicated the issues will be resolved before Congress concludes its business for the year.
“There is work being done, I understand, on a comprehensive, bipartisan solution by the end of the year for all of the medical provider issues,” House Appropriations Committee Chair Rosa DeLauro (D-Conn.) said during a hearing Thursday.
Congress has other options to heed providers’ warnings and halt or postpone the cuts. For example, the matter potentially could be dealt with in legislation to raise the debt ceiling or included in other bills that need to pass by the end of the year. But time is running short and legislators have a full slate of other issues to address.

“The [continuing resolution] isn’t the last train out of town. We will continue to pursue this,” said Chip Kahn, president and CEO of the Federation of American Hospitals. “There’s a clear recognition by the leadership in both chambers that this could create a desperate situation and it needs to be solved.”

The looming rate reductions derive from laws passed in 2010 and 2011 aimed at reducing the budget deficit.

The budget law known as PAYGO requires that increases in the deficit be offset by raising revenue or reducing spending. Because the COVID-19 relief package that passed this year enlarged the deficit, it will trigger a 4% cut to Medicare and other programs if Congress doesn’t act by mid-January.

Congress has never let PAYGO cuts to Medicare payments take effect, but providers have been urging lawmakers to deal with the issue sooner rather than later.

The Budget Control Act of 2011, which created sequestration, has resulted in automatic, across-the-board spending cuts in multiple programs since 2013, including a 2% reduction to Medicare payments that has been on hold since last year.

The American Medical Association sounded a sour note Thursday, noting that provider groups have been pressing lawmakers to deal with the issue all year.

“The end of the year is quickly approaching and it is clear that Congress is not prioritizing support for the nation’s healthcare providers who have been on the front lines of the COVID-19 pandemic,” AMA President Gerald Harmon said in a news release.

The House passed a bill earlier this summer waiving PAYGO, but it stalled in the Senate, where Republicans said they didn’t want to help Democrats waive cuts associated with a COVID-19 relief package that they didn’t support.

Still, Congress appears unlikely to let PAYGO cuts take effect given its negative impact on providers, especially ahead of an election year.Lawmakers also haven’t resolved whether to extend a temporary 3.75% fee hike for physicians under Medicare, which Congress established last year and is due to expire Jan. 1.

Physician groups have been pressuring Congress to extend it through at least 2022. Efforts to extend the increase, led by Reps. Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.), have bipartisan support.

“I’m hopeful that it’s going to happen,” said Claire Ernst, director of government affairs for Medical Group Management Association. “It has so much provider community support and we have the support from members of Congress, especially ones in the Doctors Caucus.”



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