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Providers Awaken to Day One of Sequestration

John Commins, for HealthLeaders Media, March 1, 2013

The deadline has passed and the doomsday scenario of federal budget cuts that were designed to be too painful to contemplate are about to kick in.

The across-the-board cleaver cuts will lop $1.2 trillion off the federal budget over the next nine years, averaging more than $109 billion each year. This includes $11 billion in Medicare funding in 2013 in the form of 2% reimbursement cuts.

Reaction in the healthcare sector has been largely a resigned shrug. After witnessing gridlock and brinksmanship in Washington over the last several years, healthcare executives who spoke with HealthLeaders Media this week expressed concern about the long-term effect of the cuts, but also said they were preparing for some scenario that involved doing more with less money.

Chris Van Gorder, president/CEO of Scripps Health in San Diego, says sequestration cuts are just the latest in a series of budget challenges that healthcare executives have had to face from all levels of government.

"The federal government and federal legislators only look at [Centers for Medicare & Medicaid Services] cuts. The states only look at Medicaid cuts. The counties only look at their responsibility. Sometimes it appears to providers as if all of these agencies don't look at the combined impact of their decisions," Van Gorder said in an email exchange.

"For example, we are preparing for Medicare reimbursement and (Disproportionate Share) reductions called for in the (Affordable Care Act). In California, the governor is reducing Medi-Cal reimbursement and we know that due to trickle down impact, the county will end up looking at County Medical Services reimbursement. This is all on top of reductions we are anticipating in commercial reimbursement starting in 2014 with the insurance exchanges."

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