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 Sequester Hits Long Term Care Profession

 

 

Long term and post-acute care professionals were girding themselves for massive Medicare cuts after the long-dreaded deadline for sequester came and went.

President Obama signed the so-called sequester order March 1, and the cuts will take effect beginning in April. Estimates vary on how big a bite the cuts will take—the Congressional Budget Office (CBO) has estimated that Medicare spending will fall by $9.9 billion through fiscal 2013; the White House Office of Management and Budget says that the cuts will equal $11.1 billion over the next 12 months. CBO has estimated that, if the cuts remain on the books for the next decade as scheduled, they’ll slice $123 billion from Medicare spending.

Debra McCurdy, an analyst with ReedSmith, says that things could be worse: The sequester caps spending cuts to providers by 2 percent; “this 2 percent Medicare cut compares to an almost 8 percent cut to non-exempt defense spending and about a 5 percent reduction in other non-exempt non-defense programs for the remainder of fiscal year 2013,” McCurdy says.

But those cuts may be the least of it for health care providers, said Rob Schile, a partner with the auditing firm CliftonLarsonAllen.

“The challenge for health care providers is that sequestration comes on top of other significant reductions taking place in reimbursement as a result of payment reform,” Schile said in a news release. “For these organizations, it isn’t necessarily the 2 percent reduction of sequestration that is so significant, it is the incremental impact of even more cuts on top of it.”

The cuts were inserted into the 2011 Budget Control Act as a kind of poison pill; congressional Republicans and the White House hoped that negotiators in each party would be able to concentrate on meaningful reforms with the sword of Damocles dangling above their heads.

As ReedSmith’s McCurdy drily notes, “It did not work out that way.”

Both parties are now apparently more focused on the public relations of the sequester, as opposed to the public policy of it. Democrats are working hard to portray congressional Republicans as hard-hearted reactionaries; Republicans, for their part, want Americans to see the Democrats as profligate demagogues.

However Washington moves in the short- and medium-term, experts say that it’s clear the Era of Austerity has begun for providers.

“In sum,” Schile said, “health care providers are experiencing a monumental shift in revenue cycles. How they meet the challenge of substantial reductions in the midst of a wave of change will determine how well they survive in the new environment.”
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