Unable to take advantage of a one-month delay to stave off Medicare sequestration cuts, providers will see an automatic 2 percent reduction in Medicare reimbursement begin today. The White House estimates the cuts could cost providers $11 billion in Medicare payments a year.
Hospitals in Tennessee alone could lose as much as $2 billion in Medicare payments over the next four years while Missouri's acute care facilities would lose $4 billion between 2013 and 2019, along with 9,000 jobs.
In addition to the financial impact of shrinking Medicare reimbursement, teaching hospitals, in particular, will have to manage resulting strains on patient care and medical research, warned the Association of American Medical Colleges and more than 40 specialty physician groups in a February report.
With reduced Medicare payments coming in, some providers will halt their adoption of health IT because they can no longer afford a new or upgraded electronic health record system. Today's Medicare sequestration cuts also will deal a painful blow to the Meaningful Use incentive program, according to National Coordinator for Health IT Farzad Mostashari.
With so much at stake, hospitals didn't take the sequestration cuts lying down. Up until the cuts kicked in, hospitals and provider groups remained vocal about their opposition, sending representatives to Capitol Hill and issuing reports to urge lawmakers to preserve Medicare payments and instead focus on accountability and smarter use of limited healthcare dollars.
"Real improvements in health and healthcare--as opposed to arbitrary cuts to provider payment--have the ability to put our country on a more sustainable fiscal path," stated a March report from the American Hospital Association Board of Trustees.
Not only have hospitals been voicing their concerns, they've also been taking action. Many hospital CFOs made preparations ahead of today's Medicare cuts. For instance, Faxton St Luke's Healthcare system in upstate New York prepared for the cuts back in January when it eliminated 10 positions and Florida's Lee Memorial Health System factored the cuts into the prior year's budgets.