Providers Want Congress to Pause Medicare Sequester in 2021, Too

Major provider groups are asking Congress to extend a congressionally-enacted moratorium on the application of the Medicare sequester cuts into 2021.

The American Hospital Association, American Medical Association, American Health Care Association, and National Association for Home Care & Hospice all signed a letter to House Speaker Nancy Pelosi and Congressional Leaders Mitch McConnell, Kevin McCarthy, and Chuck Schumer asking for the extension.

“Given that the PHE is certain to continue into 2021, it is a safe assumption that America’s health care providers will continue to face the overwhelming financial challenges and pressures associated with higher overhead costs due to personal protective equipment and other safeguards, lost revenue due to delayed elective procedures and/or forgone routine visits, and hazard pay to staff,” the letter stated.

“Without future sequestration relief, America’s health care safety net could be at further risk of collapse,” the letter continued.

Medicare sequester cuts were part of a 2011 deal to prevent the country from hitting the federal debt ceiling. The deal known as the Budget Control Act has reduced Medicare reimbursements to providers by 2 percent across the board since 2013.

Congress paused Medicare sequester cuts through the end of 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law in March 2020.

The pause provided critical relief to providers during the public health emergency, the industry groups said in the letter. But providers are still facing considerable financial and operational challenges as a result of the ongoing pandemic, they added.

Providers do not expect the COVID-19 pandemic to end in the near future and some are anticipating it will take at least a year to recover from the revenue losses incurred during the public health crisis.

An overwhelming majority (90 percent) of medical groups and integrated health systems experienced revenue losses of 25 percent or more during the pandemic, according to the recent AMGA report. Of these respondents, nearly 40 percent of the medical groups and 20 percent of the integrated health systems belonged to the “or more” category, with leaders reporting monthly revenue losses of over 50 percent.

Furthermore, the American Hospital Association (AHA) projects hospitals to lose at least $323 billion by the end of 2020 because of COVID-19. And that number could increase if providers experience a second surge of positive COVID-19 cases, the association warned.

Resuming the Medicare sequester cuts would exacerbate the financial challenges providers are already facing, the AHA and others told congressional leaders.

“In some cases, this 2 percent cut will effectively negate the Medicare inflation adjustment health care providers depend on and would otherwise receive in 2021. Clearly the cost of providing care to patients continues to increase,” the groups stated in the letter.

Congress intends to pass another COVID-19 relief package to support the economy during the ongoing public health emergency. However, efforts to pass a package have stalled as Election Day approaches.

Speaker Pelosi urged colleagues yesterday to pass the HEROES Act, proposed legislation acting as a $3 trillion stimulus package in response to the COVID-19 pandemic. The legislation was passed by the House in May and contains key healthcare relief, including increasing funding through the Public Health and Social Services Emergency Fund, additional resources for frontline workers, and temporary increases in Medicaid funding.

The American Medical Association backed the HEROES Act in May 2020.

The Senate has also considered a GOP-backed bill that would provide over $500 billion in relief, including a second round of Paycheck Protection Program load and more funding for COVID-19 testing and vaccine development.