SEQUESTER: Reductions to Medicare Providers, Biomedical Researchers Could Take Effect Jan. 1
If Congress fails to bridge the partisan divide by midnight and reach an agreement to avert the mandated spending cuts under sequestration, health care providers will face a series of cuts, U-T San Diego reports.
The sequester includes an across-the-board 2% cut for Medicare payments (Ignelzi, U-T San Diego, 12/29/12). According to an analysis by Avalere, the 2% cut amounts to about $120 billion over a decade, with 40% affecting hospitals (AP/Sacramento Bee, 12/29/12).
In addition, Medicare payments to physicians will be cut by 26.5% as of Jan. 1 because Congress did not pass legislation to adjust the Medicare sustainable growth rate formula. Congress has postponed the cuts every year since 2003 but this year the “doc fix” got caught up in larger fiscal cliff talks.
The American Academy of Family Physicians estimates that the average family physician would miss out on $27,000 in Medicare revenue in 2013, totaling $14 billion, if the cuts take effect. According to U-T San Diego, such cuts could result in more physicians refusing to treat Medicare beneficiaries (U-T San Diego, 12/29/12).
Health Care Providers Puzzled Over Cuts
Although Medicare providers are preparing for significant cuts under the sequester and the SGR, they are unsure if the cuts will offset increased health care spending under the Affordable Care Act, the AP/Sacramento Bee reports.
Thornton Kirby, president of the South Carolina Hospital Association, said, “Imagine a person being told they are going to get a raise, but their taxes are also going to go up and they are going to be paying more for gas.” He added, “[Providers] don’t know if they are going to be taking home more or less. That’s the uncertainty when there are so many variables in play” (AP/Sacramento Bee, 12/29/12).
Researchers Fear Long-Term Drop Over Fiscal Cliff
Meanwhile, biomedical researchers are concerned that a long-term stay over the fiscal cliff could result in job losses and significantly reduced grants, the U-T San Diego reports. According to U-T San Diego, scientists would be able to sustain research efforts if the government goes over the cliff for a short period because most scientists funded by NIH receive multiyear grants, and most institutions have some discretionary funds. However, in the long term, NIH could be forced to significantly cut research grants, likely providing smaller and shorter awards (Robbins, U-T San Diego, 12/29/12).
– compiled by Heather Drost