2 Percent Sequestration Cuts to Medicare Physician Payments Imminent

A mandatory 2 percent cut to Medicare and Medicare physician payments is imminent.

Sequestration begins on March 1, 2013, but the cuts to Medicare will begin on April 1, 2013 due to the American Taxpayer Relief Act (“cliff agreement”) that extended total sequestration for 2 months to March 1, 2013 and provided a special exception for Medicare Parts A & B to April 1, 2013.

It appears highly unlikely that Congress will reach a deal in time to avert the sequestration process, or across the board cuts.  Negotiations are expected to continue even after the sequestration process begins and may involve other discussions surrounding budget items.

The duration of these cuts remains to be seen as these Medicare payment and other related sequestration cuts will remain in effect until Congress and the White House can reach agreement.

The Congressional Budget Office (CBO) estimates the 2013 cuts to Medicare at $9.9 billion, which is inclusive of the two percent cut to Medicare payments to physicians.  (Medicaid and the Children's Health Insurance Program are excluded from the automatic spending cuts).  Other government health spending will also face a significant reduction in the range of 5.3 percent in 2013 and 7.8 percent in following years.

ASA has advocated against the sequestration cuts to Medicare and will continue to closely monitor this situation.

White House explanation of sequestration cuts.
Speaker of the House’s editorial on sequestration.
Senate Majority Leader’s statement on sequestration.

Medicare Contractor Noridian clarifies implementation of sequestration payment cut.