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Budget sequester means looming revenue cutbacks for providers

Monday March 11, 2013
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With automatic government spending cuts having taken effect March 1, healthcare entities are wary of the impact on their industry.

Among the numerous federal agencies and programs facing a mandatory reduction in spending, Medicare is staring at a 2% reduction in provider payments. The total reduction for this year will be $11 billion, according to the White House.

The sequester in theory lasts for 10 years, but it could be replaced at any time by another negotiated agreement.

MedeAnalytics, a provider of healthcare management solutions, estimates that Medicare Part A would be cut by roughly $4.5 billion this year, Ken Perez, the company’s director of healthcare policy and senior vice president of marketing, said in a news release. Depending on how the cut is spread between hospitals, skilled nursing facilities and other providers, Perez said, the average hospital would be looking at a reduction of $0.8 million to $1.3 million.

The American Nurses Association, American Medical Association and American Heart Association commissioned a report last year that described the degree to which the sequester will lead to lost jobs and reduced care capacity. The number of jobs lost in the first year alone could total 496,000 in the healthcare industry and related professions, according to the report. •

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