Sequestration includes 2% physician reimbursement cut for Medicare

As part of the federal budget sequester that took effect on March 1, Medicare reimbursement for health care providers, including hospitals and physicians in private practice, will be cut by 2% effective April 1. A representative from Centers for Medicare & Medicaid Services estimated the cuts will cost physicians, hospitals and other providers $11 billion in lost revenue.

“Physicians continue to face drastic cuts from the [sustainable growth rate] SGR, and an additional 2% cut coming from sequestration further threatens access to care for patients and prevents needed improvements in Medicare,” American Medical Association president Jeremy A. Lazarus, MD, stated in a press release. “Creating a larger gap between Medicare payment rates and the cost of delivering care will stifle innovation, reduce access to care and increase dysfunction within the Medicare program.”

Jeremy A. Lazarus

Currently, it is unclear whether the 2% cut will include allowed charges under the Medicare physician fee schedule, according to the release. Also unclear is whether physician Medicare claims payments will be affected, whether copayments for Medicare beneficiaries will be affected and whether the cuts affect claims with a date of service of April 1 as opposed to claims payments made on or after that deadline.

Lazarus suggested that physicians should find ways to reduce costs in their practices to brace for the payment cuts. He noted that since 2001, physician payment rates have increased 4% while caring for patients has increased higher than 20%.

“At the same time that Medicare physician payment rates have been frozen, physicians need to make investments in their practices to help design, lead and adopt new models of care delivery that can increase quality and reduce costs now and in the future,” Lazarus stated. “Further cuts are counterproductive and stifle important progress while placing an unsustainable burden on physician practices.”