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Senate leaders Chuck Schumer (D-N.Y.) and Mitch McConnell (R-Ky.) have reached an agreement to extend the moratorium on a 2% Medicare sequester cut that was set to go into effect on March 31, the American Hospital Association confirmed to Healthcare Finance News.
Although a vote has yet to be officially scheduled, the Senate is expected to vote on a hotlined version of H.R. 1868 "in the next day or two," AHA said.
The House passed H.R. 1868 last week, which postpones Medicare sequester payment cuts until the end of the year and exempts the budgetary effects of the $1.9 trillion COVID-19 relief bill from the Statutory Pay-As-You-Go Act of 2010.
The hotlined bill the AHA expects the Senate to vote on this week does not address the 4% Medicare PAYGO cuts that were triggered when the American Rescue Plan was passed. Instead, it will provide a nine-month extension on the 2% sequester moratorium until December 31.
WHY THIS MATTERS
Hotlining a bill allows it to skip traditional Senate procedures and moves it to a vote with limited floor debate. This practice serves to move along bills that are under political pressure, often before a recess, according to the American Civil Liberties Union. The two-week Senate recess starts on Monday, March 29.
The AHA and other provider groups have repeatedly pushed Congress to pass legislation that would postpone Medicare payment cuts caused by the sequestration before the cuts take hold on March 31.
A 2% cut in Medicare payments would exacerbate the financial challenges already facing healthcare providers, the AHA said.
Even under the most optimistic scenario with a smooth vaccine rollout and reductions in COVID-19 hospitalizations, 39% of hospitals are expected to operate in the red during 2021, according to a Kaufman Hall report just released by the AHA.
If the year doesn't go as planned, roughly half of hospitals could have negative margins that are as much as 80% below the pre-COVID-19 figures, according to the report.
THE LARGER TREND
Under the Budget Control Act of 2011, the federal budget was scheduled to undergo cuts of more than a trillion dollars over a nine-year period, which resulted in 2% annual Medicare payment cuts.
Congress delayed those cuts because of the pandemic when it passed the Coronavirus Aid, Relief and Economic Security Act. The period initially ran through the end of 2020, and then until March 31, 2021.
But with the recent passing of the American Rescue Plan, an additional $36 billion worth of budget cuts are set to hit next year under the Pay-As-You-Go Act of 2010.
The PAYGO Act requires that new legislation changing taxes, fees or mandatory expenditures not increase projected deficits. If any do, automatic across-the-board cuts in selected mandatory programs must be made.
The AHA expects the PAYGO cuts to be addressed later this year.
ON THE RECORD
"Keeping hospitals strong is in the interest of government at every level because this is about maintaining our ability to provide essential public services, this is about our ability to maintain our service as society's ultimate safety net, and this is about ensuring our ability to protect patients and serve our communities," AHA CEO and president Rick Pollack said Tuesday during a media briefing about the budget cuts.
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