Update on Sequestration
Monday, February 25, 2013
by: VNAA Policy Team

Section: Public Policy and Advocacy




While the outlook on Congressional activity is far from certain, front and center of recent activities is the looming March 1 implementation of automatic budget cuts (“sequestration”) and proposals that are starting to emerge to reform health care entitlements, including Medicare and Medicaid.
 
By way of reminder, sequestration cuts for Medicare must be implemented on the first of the month after sequestration is set to take place, which means the actual implementation date for the required 2 percent Medicare payment reductions will take effect on April 1. However, if sequestration would be overturned, it is likely that cuts in Medicare programs could be much deeper, so sequestration may be the lesser of two evils for Medicare. 
 
There has been much politicking on both sides of the aisle about delaying the March 1 implementation of the sequestration reductions. Recently, the President called on Congress to delay these arbitrary, across the board cuts. Senate Democrats are reportedly working on a proposal to “pay for” delaying these cuts. The Democrats proposal would use both spending and tax revenue policies to pay for the delay. In response, the Republicans have said they would not support any “sequestration delay” policy that includes tax revenues, which has resulted in a stalemate.
 
At this point, while most in Washington are expressing grave concerns about the impacts of sequestration, most believe that Congress will not be able to reach agreement on how to stall its implementation. Therefore, most expect sequestration will take effect on March 1.
 
As with other impacted the Department of Health and Human Services agencies, the Centers for Medicare and Medicaid Services (CMS) has no discretion to reallocate the sequester cuts among programs. Additionally, the required cuts for Medicare for “FY13” will be applied for the full year following their implementation – April 1, 2013 through March 31, 2014.  Finally, if Congress does not intervene to stop sequestration, there could be additional cuts of 2 percent Medicare sequester cuts for the remaining eight years of the sequestration law.
 
As the March 1 sequestration date approaches, VNAA will continue to keep you posted on developments in this area.
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