Medicare Sequestration Suspended through December 2021

On April 14, 2021, President Joseph R. Biden signed into law H.R. 1868, which prolonged the suspension of Medicare sequestration through December 31, 2021. The new law supersedes the American Rescue Plan Act of 2021, which suspended Medicare sequestration through April 1, 2021.

Medicare sequestration is the product of the Budget Control Act of 2011, put into place by the Obama Administration in an attempt to resolve the Debt-Ceiling Crisis – a debate within Congress regarding the appropriate level of government spending and its effect on the national debt and the country’s deficit. The Budget Control Act of 2011 called for federal budget cuts of almost $1 trillion over ten years. What that ultimately meant to healthcare providers was a 2% reduction of Medicare revenue.

While COVID-19 has been detrimental to all industries, the healthcare industry has been particularly affected due to reductions in patient volume and revenue, in addition to elevated expenses to keep healthcare workers and patients safe during the pandemic. According to a survey by the American Medical Association (AMA), 81% of physicians surveyed in July and August of 2020 said that revenue was significantly lower than it was prior to the pandemic, with an average decrease of 32%.

The reinstatement of Medicare sequestration, currently scheduled for January 1, 2022, will only exacerbate the problem, as noted by the president of the AMA, Susan Bailey, MD, who said, “The Senate and House, Democrats and Republicans, have overwhelmingly acknowledged that cutting Medicare payments during a pandemic is an ill-conceived policy. Physician practices are already distressed, and arbitrary 2% across-the-board Medicare cuts would have been devastating.”