Hospitals, Providers to Lose $11.1B From Medicare Sequestration Cuts

Hospitals and other providers will see Medicare payment reductions totaling $11.1 billion this upcoming year, due to the Budget Control Act of 2011, unless Congress passes new measures to prevent the cuts, according to a report from the White House's Office of Management and Budget (pdf).

A report from the Office of Management and Budget details sequestration cuts.Last summer, the bipartisan Joint Select Committee on Deficit Reduction, more commonly known as the "supercommittee," was unable to reach an agreement on ways to reduce the national deficit. As such, the Budget Control Act of 2011's sequestration process became the default plan to reduce the deficit by $1.2 trillion over the next 10 years via across-the-board budget cuts to all government agencies.

In the sequestration plan, roughly $109 billion of cuts would be implemented every year from fiscal year 2013 to FY 2021. Defense spending would take the biggest hits with cuts of 9.4 percent. Nondefense spending would be reduced by 8.2 percent, most entitlement programs by 7.6 percent and Medicare by 2 percent.

Two percent of Medicare's budget ($554.3 billion) is roughly $11.08 billion. Medicare providers — ranging from hospitals and physician practices to home health agencies and hospices — would see reductions in their payments, but Medicare beneficiaries would not lose any of their benefits. Over the next 10 years, Medicare providers stand to lose upwards of $120 billion.

In addition to the Medicare cuts, the National Institutes of Health would also have to "halt or curtail scientific research, including needed research into cancer and childhood diseases," according to the OMB's report.

President Barack Obama and the OMB said the sequestration process is a "blunt and indiscriminate instrument," and the reductions could be "destructive" to the country's social programs, national security and other governmental functions. President Obama has called on Congress to "act responsibly" and put forward a new proposal.

"[Sequestration] is not the responsible way for our nation to achieve deficit reduction," according to the OMB's report. "The President has already presented two proposals for balanced and comprehensive deficit reduction. It is time for Congress to act. Members of Congress should work together to produce a balanced plan that achieves at least the level of deficit reduction agreed to in the BCA that the President can sign to avoid sequestration. The administration stands ready to work with Congress to get the job done."

More Articles on Medicare Sequestration:

Report: Sequester of Medicare Spending Could Lead to 750K Lost Jobs

Sen. Bernie Sanders: Medicare, Medicaid Cannot Be Targets in Budget Talks

President Obama Signs Debt Deal With Possible 2% Medicare Cut

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