Congress halts Medicare cuts, averting loss of billions to hospitals

Hospitals and healthcare advocates are likely breathing a little easier.

Congress has signed off on a measure to prevent cuts to Medicare programs from taking effect Jan. 1. The cuts could have cost hospitals billions of dollars in federal aid.

The Senate approved legislation to halt the Medicare reductions Thursday; it was part of the legislation on raising the debt limit. The House of Representatives passed the bill earlier this week.

President Biden is expected to sign the measure, health advocates said.

Healthcare leaders had pressed lawmakers to prevent the cuts from taking effect. Advocates for hospital and health systems fumed earlier this month when Congress didn’t address the Medicare cuts when it passed a short-term measure to fund the government.

With the COVID-19 pandemic straining hospitals and health systems facing uncertain financial pictures, healthcare leaders said they couldn’t afford the loss of billions in federal aid.

Rick Pollack, president and CEO of the American Hospital Association, said the cuts would have been damaging.

“The AHA appreciates that the Senate, on a bipartisan basis, has joined the House in halting harmful and imminent Medicare cuts to hospitals and physicians,” Pollack said in a statement.

“We will continue to work with Congress and the Administration to ensure that all hospitals, health systems and caregivers have the resources and support they need to continue battling COVID-19 while also providing the other essential care and services their patients and communities depend on each day,” he said.

The legislation blocks the 4% statutory cut from the “pay-as-you-go” provision for a year. If this cut had taken effect, it would have reduced Medicare payments by more than $9 billion in 2022, advocates said.

The bill also extends the moratorium on the 2% Medicare payment sequester until April 2022. The bill reduces the 2% sequester cut to 1% from April 1 through June 30, 2022, according to the AHA.

Sequestration is the automatic reduction of government spending spelled out in federal law. Under the law, spending cuts go into effect if lawmakers can’t broker an agreement on budgets. The sequester provisions were slated to go into effect Dec. 31.

The bill also included a one-year, 3% increase in Medicare physician payments in 2022. Without the Senate bill, there was a scheduled 3.75% payment cut to Medicare Physician Fee Schedule (PFS) payments.

In addition, the bill also delays cuts to clinical laboratories that health advocates said would have been very costly. The bill delays the laboratory cuts for one year, the AHA said. If the bill hadn’t passed, some labs were facing cuts of 15% for some large tests.

Gerald Harmon, president of the American Medical Association, welcomed the news and said Congress did "move toward preserving the viability of physician practices and maintaining access to care."

Harmon also urged Congress to move forward in 2022 to prevent reductions in federal aid for healthcare providers.

“There is no need to wait for the last minute to start working on the systemic problems," Harmon said in a statement. "These automatic cuts should remind members of the needed reforms. Congress can get a head start on doing the right thing when it reconvenes early next year.”