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Analysis

Stakeholders Press Congress to Suspend 2% Sequester Cuts

By John Commins  
   March 16, 2020

The U.S. House this is expected to take up an emergency spending bill for the coronavirus, but sequestration relief is not part of the package.

Hospital stakeholders have urged Congress to suspend the upcoming 2% Medicare cuts mandated under the sequestration "for at least the duration of the coronavirus pandemic."

"This action alone will provide immediate, significant relief across-the-board, and will signal continued Congressional support for the hard work that lies ahead for all of us," the American Hospital Association, the Association of American Medical Colleges, and the Federation of American Hospitals said Sunday in a joint letter to Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi.

"Suspending the sequester and restoring those payments will provide a much-needed jolt of confidence not just for hospitals, but for physicians, post-acute providers, Medicare Advantage plans and so many others who rely on Medicare as a trusted partner," the letter said.

The U.S. House this is expected to take up an emergency spending bill – estimated at more than $100 billion -- to offset the cost of paid sick leave, family leave, and expanded unemployment benefits. However, sequestration relief is not part of the package.

On Friday, President Donald Trump declared a national emergency and earmarked $50 billion to fight the coronavirus, on top of the $8.3 billion he pledged two weeks ago.

In an analysis issued this month, BDO International noted that many providers in the United States are under financial stress, and that the coronavirus could have a direct and lasting impact in the form of supply chain disruption and financial challenges as many hospitals curtail profitable elective surgeries until the epidemic subsides.

"For example, more than three-fourths (76%) of U.S. providers already have 60 days or less cash on hand, and nearly a quarter (23%) are concerned about government reimbursement risks, according to BDO’s Treating Healthcare Distress. "Variables like instability around the Affordable Care Act and uncertainty around incoming payments because of fluctuating deductibles and patient copays, meanwhile, will persist."

In their letter to Congressional leaders, the hospital stakeholders noted that the Medicare Payment Advisory Commission's semi-annual report this month found that Medicare payments to hospitals "fall far below the cost of care and have been deeply negative for well over a decade."

"The Medicare sequester, which reduces payments for most benefits by 2%, is a major contributor to these underpayments," the stakeholders wrote. "Indeed, MedPAC has argued against the Medicare sequester, "'because it reduces payments for all sectors by 2% without regard to payment adequacy.'"

Instead of the "arbitrary cuts," the stakeholders called for "the flexibility desperately needed to respond to the evolving demands of this pandemic."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

AHA, AAMC, FAH call for "the flexibility desperately needed to respond to the evolving demands of this pandemic."

Concerns have been raised that the coronavirus could create supply chain disruption and financial challenges as many hospitals curtail elective surgeries until the epidemic subsides.

MedPAC last week found that Medicare payments to hospitals "fall far below the cost of care and have been deeply negative for well over a decade."


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