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Health groups oppose $11B in potential sequestration Medicare cuts

An Office of Management and Budget (OMB) report released last week that showed sequestration would cause an $11 billion cut to Medicare and looming cuts to physician reimbursements under the sustainable growth rate formula (SGR) has physicians groups saying the cuts would eviscerate their ability to provide quality care.

A letter to Democratic Senate Majority Leader Harry Reid and Republican Senate Minority Leader Mitch McConnell, from more than 120 healthcare organizations including the American Medical Association (AMA) and the American Academy of Family Physicians (AAFP) noted that “the combination of a sequestration cut and looming Medicare Sustainable Growth Rate (SGR) payment cut would not only impede improvements to our health care system, it could lead to serious access to care issues for Medicare patients as well as employment reductions in medical practices.”

A report on the impacts of the sequestration cuts jointly sponsored by the American Hospital Association, the AMA and the American Nurses Association predicted that the automatic cuts to the Medicare program could potentially cost more than three-quarters of a million healthcare and healthcare-related jobs by 2021.

“Office-based physicians alone supported 4 million jobs in 2009," said Jeremy A. Lazarus, MD, president of AMA, during a press conference urging Congress to block the cuts. "The Medicare spending sequestration cut would put many of those jobs in jeopardy.”

Beyond the anticipated job losses, healthcare groups also fear that should the automatic 2 percent across-the-board cuts happen in the federal budget, it will also jeopardize many of the programs and initiatives created under health reform.

"Sequestration also will result in across-the-board cuts to a wide range of essential programs to ensure high quality and accessible patient care," noted the letter to Reid and McConnell. "We believe that Congress should not abdicate its responsibility to deliberate and make policy decisions on what is important and needs to be funded.”

In laying out the potential impacts to the federal budget – not just to healthcare programs – OMB seemed to urge congressional leaders to take up the mantel and not allow the automatic cuts to take place.

"Sequestration is a blunt and indiscriminate instrument. It is not the responsible way for our nation to achieve deficit reduction," the OMB report noted.

While the bulk of the cuts would impact Medicare, a number of other health-related programs would also see significant reductions, including $78 million in cuts to funds used for fighting fraud and abuse; $76 million in reductions to the prevention and public health fund; and $66 million in cuts to the program handing out grants to help create state health insurance exchanges, among others.

A few programs would escape the indiscriminate knife of sequestration, including the Children’s Health Insurance Program (CHIP) and two programs created under the Affordable Care Act: funding to provide health coverage for people with pre-existing medical conditions and the creation of Consumer Operated and Oriented Plans (CO-OPs).

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