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Medicare reimbursement for physicians may be cut by 2% if Congress doesn't act by March 1

February 22, 2013
Area(s) of Interest: Payor Contracting Practice Management 

Across-the-board federal budget cuts will be triggered on March 1 if Congress fails to come to an agreement on how to reduce the federal deficit. With no solution on the horizon, physicians should prepare for a 2 percent reduction in reimbursement from the Medicare program. If Congress fails to stop the cuts, physician reimbursement will be cut by 2 percent for services provided on or after April 1.


The 2 percent "sequestration" cuts are part of the $1.2 trillion in cuts required by the Sequestration Transparency Act, part of a deal worked out to end last year's debt-ceiling crisis. The cuts are evenly split between defense spending — with spending on wars exempt — and discretionary domestic spending. Medicaid is exempt from the cuts.


The mandatory Medicare cuts will result in a savings of $11 billion in 2013.


The biggest of the sequestration cuts will hit the Department of Defense, which will lose almost $55 billion. Education will lose 100 percent of the $38 billion in annual grants it gives to states. Total cuts for 2013 will be $109 billion.


Congress and President Obama are scrambling to avoid these automatic budget cuts, but most in Washington believe they will happen. However, it is also likely that Congress will eventually come to an agreement and reverse some of these cuts.


The California Medical Association (CMA) is vigorously fighting the Medicare cuts. CMA leaders were in Washington, D.C., mid-February urging the California Congressional delegation to stop these cuts. We will keep fighting, but in the meantime, physicians should prepare for the possibility of a 2 percent cut to their Medicare claims.


Contact: Elizabeth McNeil, (800) 786-4262 or emcneil@cmadocs.org.

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