If Congress Reaches a Fiscal Cliff Deal, What Would Hospitals Lose?

President Barack Obama and leaders in Congress have yet to reach a deal to avert the so-called "fiscal cliff" of tax increases and spending cuts, but for hospital leaders, going over the cliff may be the best option.

In that scenario, Medicare would absorb a 2 percent across-the-board cut. All providers would see Medicare payment reductions totaling $11.1 billion in 2013 due to the sequestration plan. While this represents a stark austerity measure for those who rely on Medicare, proposals to avoid the fiscal cliff could hurt hospitals worse.

According to analysis from consulting firm Avalere Health, hospitals and skilled nursing facilities would bear a large portion of new spending cuts, losing roughly $120 billion to $136 billion over 10 years in Medicare and Medicaid cuts, or more than $12 billion in cuts per year, under a combined proposal from Congress. This would represent a much sharper decline in Medicare reimbursements than sequestration.


Specifically, there would billions of dollars in cuts to Medicare bad debt payments, graduate medical education and indirect medical education costs, and the Medicaid provider tax threshold.

No matter the result, Avalere Health said in the analysis that federal healthcare programs will be a focal point of reform beyond the fiscal cliff talks going into 2013.

"As the nation's fiscal problems grow, so do the magnitude and difficulty of conventional payment reductions under consideration," said Dan Mendelson, CEO and founder of Avalere Health, in a news release. "Given the need to come to an agreement before the end of the year, it is unlikely that we will see any meaningful policy that addresses real health system problems in this round of negotiations."

More Articles on Hospitals and the Fiscal Cliff:

Hospital Executives Worry Fiscal Talks Will Further Cut Medicare
House Democrats Willing to Axe IPAB in Fiscal Cliff Talks
HCA Senior VP: Government Needs to Increase Medicare Age

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