Providers Try to Stave Off Looming Medicare Spending Cuts

UPDATED The American Medical Association (AMA) has urged Congress to prevent pending Medicare spending cuts triggered by the latest COVID-19 relief plan.

In a March 16 letter to House Speaker Nancy Pelosi and Republican Leader Kevin McCarthy, the healthcare industry group encouraged Congress to pass legislation like H.R. 1868 that would extend the current moratorium on the two percent Medicare sequester cuts beyond the March 31, 2021, deadline.

House Democrats introduced H.R. 1868 last week to provide “largely technical fixes and sequestration adjustments” to the American Rescue Plan Act of 2021, which was signed into law on March 11.

AMA also supported the bill’s efforts to avoid up to four percent across-the-board Medicare spending cuts under the American Rescue Plan Act of 2021. The cuts were included as statutory “PAYGO” provisions, which prevent new legislation from increasing the federal budget deficit.

The Medicare spending cuts—which could total more than $36 billion, AMA previously reported—would “threaten the financial viability of physician practices” amid the ongoing COVID-19 pandemic, the group stated.

“As the COVID-19 pandemic persists and continues to have a substantial fiscal impact on physician practices, it is critically important that physicians are able to provide frontline care to Medicare beneficiaries. These arbitrary, across-the-board Medicare cuts are detrimental and will surely have a devastating impact on many already distressed physician practices that are still recovering from substantial financial losses due to the pandemic,” AMA wrote in the letter.

The group asked Congress to address the immediate threats presented by the Medicare spending cuts, but also future Medicare cuts caused by policies in the 2021 Physician Fee Schedule.

Provider volumes and revenues are still strained by the ongoing pandemic. Just recently, healthcare consulting firm Kaufman Hall reported that the hospital operating margin index was -0.6 percent the first month of this year, not including federal support from the CARES Act.

The margin index was still negative with CARES Act funding at -0.1 percent, the firm reported.

Hospital financial performance suggests a long road ahead in respect to financial recovery from the pandemic. The American Hospital Association (AHA) already expects hospitals to lose up to $122 billion this year because of pandemic-related costs and expenses.

Democratic Representatives John Yarmuth (D-KY), Richard Neal (D-MA), Frank Pallone (D-NJ), and David Scott (D-GA) proposed in H.R. 1868 to bolster provider finances by extending the suspension of the Medicare sequester through the end of the year and excluding the budgetary effects of the American Rescue Plan Act of 2021 from the scorecards established by the Statutory Pay-As-You-Go (PAYGO) Act of 2010.

The bill would also modify the grandfathering deadline for Medicare rural health clinic payment changes in the Consolidated Appropriations Act, prevent Medicare Disproportionate Share Hospital payment reductions for some facilities, and ensure Section 2104 benefits under the CARES Act are treated the same when calculating income for any purpose under Medicaid and the Children’s Health Insurance Program (CHIP).

AHA and the Medical Group Management Association (MGMA) have also expressed support for H.R. 1868.

MGMA and other industry groups, including the Federation of American Hospitals (FAH), are also throwing their weight behind similar bipartisan legislation introduced earlier this week.

Senators Jeanne Shaheen (D-NH) and Susan Collins (R-ME) unveiled S. 748, Medicare Sequester Relief Act, on March 15, 2021. The bill would extend the Medicare sequester moratorium through the end of the COVID-19 emergency period.

“We urge Congress to move swiftly and enact this legislation to extend the Medicare sequester moratorium through the duration of the COVID-19 Public Health Emergency. It is a vital step towards helping ensure hospitals and providers continue to have the needed resources to defeat this virus and make sure all patients have access to the quality care they need and deserve,” Chip Kahn, FAH president and CEO, said in a statement.

UPDATED 03/23/2021: House passed H.R. 1868 in a 246-175 vote on March 19, 2021.

In a statement, AHA said, "America’s hospitals and health systems thank the U.S. House of Representatives for passing legislation today that extends relief from pending Medicare cuts to doctors and hospitals that are slated to resume at the beginning of next month. Hospitals, health systems and our heroic caregivers remain on the front lines of the COVID-19 pandemic, caring for patients and communities and playing a leading role in vaccination efforts. Now is not the time to pull resources away from these critical efforts."

"We now look forward to working with the U.S. Senate to achieve relief from the pending Medicare sequester cuts before they go into effect," continued Rick Pollack, AHA president and CEO.