UPDATE: Dec. 3, 2021: Hospital and physician groups are up in arms over a year-end government spending bill that failed to stave off scheduled Medicare cuts, despite fierce lobbying from their sector.
Lawmakers on Thursday reached a bipartisan deal that would extend current levels of government funding through Feb. 18. The legislation doesn't include provisions to push back or stop the upcoming Medicare cuts, some of which take effect Dec. 31, and could reduce Medicare pay by 6% for hospitals and 10% for physicians.
Congress could still take action to avert the cuts, though that's looking increasingly unlikely amid the legislative year-end rush.
Provider interests — including those representing for-profit hospitals, emergency physicians, surgeons and medical practices — immediately condemned the lack of action, citing ongoing financial uncertainty due to staffing and labor issues and the rising threat of the omicron variant.
Groups including the Medical Group Management Association, Surgical Care Coalition and American Medical Association said in statements Thursday they are deeply disappointed in Congress, accusing legislators of ignoring sacrifices made by physicians during the pandemic. Allowing the cuts to go into effect will result in more chaos in the sector, and could lead to care delays and decreased access to physicians, providers maintained.
American Hospital Association CEO Rick Pollack called Congress' inaction "extremely unfortunate."
"As hospitals and physicians continue their almost two-year battle against COVID on behalf of patients across the country, including the recent disturbing news about the Omicron variant, now is not the time to impose additional financial hardship," Pollack said. "It would be an outrage to not protect the very caregivers who are fighting this relentless virus every day."
- Hospital groups are kicking their lobbying up a notch as 2022 approaches, looking to fend off scheduled cuts to Medicare's provider pay.
- Major hospital lobbies sent a letter on Monday to congressional leaders urging them to extend the moratorium on Medicare sequester cuts, and prevent the pay-as-you-go sequester from taking effect. A hospital interest group called the Coalition to Protect America's Health Care has even launched an ad campaign urging Congress to prevent the cuts.
- The provider groups are contending they continue to face financial challenges as the pandemic stretches on, despite most major U.S. health systems reporting healthy revenue and profits in 2021 so far.
The letter, sent to top congressional leadership and signed by the American Hospital Association, Federation of American Hospitals and America's Essential Hospitals, among other provider interests, flagged two areas of concern: Medicare sequester cuts and the pay-as-you-go sequester.
It's the latest move by hospital interests to prevent the 4% pay-go cut, which is due to the American Rescue Plan passed in March, which will overlap with the expiration of a current pause on the 2% Medicare sequester, stemming from the Budget Control Act of 2011.
Pay-go mandates that new legislation not increase the deficit. If it does, automatic spending reductions kick in, unless they're waived by Congress.
The pay-go cuts, if they go through, will result in an estimated loss of $36 billion in Medicare spending in 2022 alone, according to the Congressional Budget Office. In the letter sent Monday, the hospital groups said they estimate payments to providers in fee-for-service Medicare next year (which tend to total about a fourth of Medicare spending) would fall by $9.4 billion if pay-go progresses as planned.
If lawmakers allow the cuts to go into effect, it will mark the first time that Congress has not waived the pay-go sequester.
Hospital groups are also raising the alarm about the moratorium on Medicare sequester cuts. Currently, Congress' freeze on a 2% cut to all Medicare payments is scheduled to expire at the end of the year. If not delayed further, health systems and hospitals in FFS Medicare will lose an estimated $4.7 billion, according to the letter.
The groups, which asked Congress to move on the issues by year's end, are citing COVID-19 as the reason for needing additional relief, along with fiscal challenges like higher workforce and staffing costs, higher spending on drugs and supplies to cope with outbreaks and treating more medically complex patients, which all threaten the return to regular operations.
"Additional Medicare reductions to providers are not sustainable and put our members’ ability to care for their patients at risk," the groups wrote.
However, federal subsidies last year offset the worst of COVID-19's financial effects on hospitals, research has shown. And for-profit systems like Tenet and HCA reported strong revenue and profit growth in the third quarter of the year, even as costs rose amid delta headwinds.
It's unclear if Congress will act on the requests, as it's politically savvy to avert cuts to the Medicare program, which covers some 64 million Americans, the majority of which are seniors. However, the need to curb costs in Medicare is increasingly important as the program runs dangerously low on funds.
Though lawmakers to date have not allowed Medicare's trust fund to become depleted, policymakers expect the pot that funds the Part A hospital benefit to become insolvent by 2026 without legislative action, as program spending continues to balloon. Spending is only projected to grow from its current level of 4% of the gross domestic product before leveling off at 6.5% in just a few decades, according to a recent report from the Medicare Board of Trustees.
That outlook could be significantly higher if cost reduction measures (like the pay-go cuts) are scaled back, trustees said. If that's the case, Medicare spend could get as high as 8.5% of the GDP by 2095, straining the U.S. economy and the federal budget and threatening access to coverage.