Sequestration Will Impact Medicare Payment April 1
Monday, March 4, 2013
by: VNAA Policy Team

Section: Public Policy and Advocacy

On March 1, the federal budget tool known as “sequestration” went in to effect when Congress failed to pass legislation to fix it. The Fiscal Cliff deal forged on January 2, 2013 gave Congress an additional two months to develop a legislative alternative to prevent the cuts required by sequestration but they failed to find a compromise. With sequestration in effect, the automatic spending cuts are now triggered but the actual cuts will not begin for another month (this includes the two percent cut to Medicare providers). Congress is expected to revisit the sequester and could fix all or parts of it retroactively, but the process and potential compromise is still uncertain. 

Sequestration was implemented as part of the Budget Control Act of 2011 (BCA), a bipartisan agreement with the intent of reducing the deficit by $1.2 trillion over 10 years. The cuts will be equally divided between defense and non-defense spending. Payments to Medicare providers will be reduced by no more than two percent. The Medicaid program, the State Child Health Insurance Program (SCHIP) and the Department of Veterans Affairs were exempt from sequestration.
In addition to the two percent reduction to Medicare provider payments, other important health related programs will receive cuts due to sequestration including programs at the Health Resource and Services Administration and the Centers for Medicare and Medicaid Services.

On February 25, the White House released numbers on the state-by-state impact of sequestration. To review the impact of the cuts on your state, please click here.

VNAA will continue to monitor developments on this important issue and keep members informed.
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