Dec. 11—A bipartisan budget deal would obtain much of its savings from a two-year extension of the budget sequester that includes across-the-board cuts to Medicare providers and insurers.

The leaders of the Senate and House Budget Committees released the Bipartisan Budget Act of 2013 to set spending levels for FY14 and FY15. The bill would eliminate $63 billion in cuts required by the Budget Control Act of 2011. The 10 years of cuts, which began in 2012, included a 2 percent across-the-board cut in rates paid to Medicare providers and insurers. The provider cuts accounted for $120 billion of the sequester’s $1.2 trillion in deficit reductions.

The new budget derived a large part of its deficit reductions from the $28 billion in savings expected by extending the sequester cuts for two more years (to 2022 and 2023).

Hospital advocates came out sharply against the new round of proposed cuts and urged opposition to the legislation.

"The budget agreement threatens access to critical health care services for seniors by trading off Medicare cuts for increases in government and defense spending today," Chip Kahn, president of the Federation of American Hospitals, said in a release. "It sustains bad budget policy under the guise of solving real mandatory spending issues facing this country."

The cuts would come on the heels of $95 billion in Medicare reductions to hospitals in the last three years, Kahn said.

A September 2012 report produced for the American Hospital Association (AHA), American Medical Association (AMA), and American Nurses Association (ANA) concluded that the sequester cuts could cost nearly 767,000 healthcare jobs over its 10 years.

The existing sequester cuts were cited as reason Fitch Ratings listed the outlook for U.S. not-for-profit hospitals and healthcare as negative on Dec. 11.

"Slowdown in revenue growth evidenced in 2013 will likely deepen in 2014, driven by the declining trend of inpatient volumes, increasing use of high-deductible health plans, the expectation for another year of Medicare sequestration cuts and lower reimbursement rate increases from both governmental and private insurers," Jim LeBuhn, head of Fitch's Non-Profit Health Care group, said in a release. 

The budget deal drew praise from other provider advocates, including Molly Cooke, MD, president of the American College of Physicians. Cooke hailed the two-thirds reductions in FY14 and FY15 sequester cuts included in the bill. 

The measure also is expected to include a three-month delay in the 20 percent cut to Medicare physician pay rates that is scheduled to begin Jan. 1. Such a delay would give time for bills that would permanently replace the funding formula to move through Congress.

Publication Date: Wednesday, December 11, 2013