Sequester deadline arrives without resolution

March 1, 2013

Physician groups are among the many voices chiding federal lawmakers for their failure to avert billions of dollars in arbitrary spending cuts that will result in a cut to Medicare reimbursements.

Today is the deadline for Congress to change the course and avoid across-the-board 2% Medicare reimbursement reductions, which are slated to go into effect April 1 as part of the nationwide cuts resulting from sequestration.

Funding for medical research and graduate medical education are also on the line but, perhaps more importantly, the sequestration cuts are said to lead to almost 500,000 jobs beings eliminated this year, which will significantly effect the amount of discretionary income the public has for healthcare costs.

Medical Economicsreported earlier this week that the sequestration cuts to Medicare would result in between $10.7 billion and $16.4 billion annually. Physician offices could face 62,000 of the more than 700,000 lost jobs predicted by 2021 through job freezes, layoffs, delays in practice investments, and more.

Sequestration is the result of a law passed by Congress in 2011 that promised about $1 trillion in automatic, arbitrary spending cuts across federal spending initiatives if Congress couldn’t come to an agreement to reduce the national deficit by $4 trillion. President Barack Obama and Congress have cut spending and raised taxes to the tune of $2.5 trillion so far, but missed the $4 trillion mark before the March 1 deadline set back in 2011. Congress has until today to come up with a solution or accept a plan previously put forth by Obama that he says would allow the federal government to avoid the cuts while still reducing the deficit through spending cuts and closing tax loopholes.

“At a time when our businesses have finally begun to get some traction, hiring new workers, bringing jobs back to America, we shouldn’t be making a series of dumb, arbitrary cuts to things that businesses depend on and workers depend on like education and research and infrastructure and defense,” Obama said in a deadline-day speech on the scheduled cuts March 1. “It’s unnecessary, and at a time when too many Americans are still looking for work it’s inexcusable.”

While answering questions from the press after the speech, Obama laid part of the blame for the sequester on long-term problems caused by rising healthcare costs and programs such as Medicare.

“What I’ve said very specifically, very detailed, is that I’m prepared to take on the problem where it exists on entitlements, and do some things that my own party really doesn’t like if it’s part of a broader package of sensible deficit reduction,” the president said. “There are members of my party who violently disagree with the notion that we should do anything on Medicare. And I’m willing to say to them, ‘I disagree with you.’ Because I want to preserve Medicare for the long haul. And, you know, we’re going to have some tough politics within my party to get this done.”

Jeremy Lazarus, MD, president of the American Medical Association (AMA) says that physicians will be especially hard-hit by the cuts because of the already flawed nature of the Medicare physician payment system.

“Our lawmakers have failed to act, and Medicare patients and physicians will now feel real pain in the form of new cuts that come at an already difficult time for the nation's economy,” Lazarus says. “The across-the-board cut will hit physicians particularly hard because of the fundamentally flawed Medicare physician payment system. Since 2001, Medicare payments for physician services have only increased by 4%, while the cost of caring for patients has gone up by more than 20%. A 2% cut widens the already enormous gap between what Medicare pays and the actual cost of caring for seniors.”

In addition to causing addition financial burden for physicians, the cuts will threaten the strength of the entire medical profession, Lazarus continues.

“Creating a larger gap between Medicare payment rates and the cost of delivering care will stifle innovation, reduce access to care, and increase dysfunction within the Medicare program," he says. "At the same time that Medicare physician payment rates have been frozen, physicians need to make investments in their practices to help design, lead, and adopt new models of care delivery that can increase quality and reduce costs now and in the future. Further cuts are counterproductive and stifle important progress while placing an unsustainable burden on physician practices.”

Other groups echoed Lazarus and the AMA, expressing disappointment in federal lawmakers over their impasse and the disastrous effect it could have on the nation.

“MGMA is disappointed in Congress’s failure to prevent across-the-board sequestration cuts, which will impact payments to physicians and compound the already dire situation for medical group practices caused by the sustainable growth rate (SGR) formula,” says Susan L. Turney, MD, MS, FACMPE, FACP, president and chief executive officer of the Medical Group Management Association (MGMA). “This arbitrary and formulaic approach destabilizes Medicare at a time when Congress should be focused on implementing policies to achieve a high performing patient centered program. We urge Congress to seek a responsible, comprehensive deficit reduction package that reverses the Medicare sequestration cuts and repeals the SGR once and for all.”


 

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