by Brendon Nafziger
, DOTmed News Associate Editor
Many doctors and hospitals across the country wish it were a joke but it's not. A 2 percent cut to Medicare physician and hospital payments goes into effect today, as part of the sweeping cuts to federal spending known as sequestration.
The sequestration comes about from a 2011 law that requires Congress to pass a balanced budget or have the government face more than $1 trillion in across-the-board cuts. So far this year, Republicans and Democrats have failed to agree on a budget deal or shield Medicare payments from the cuts.
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Although the sequester went into effect March 1, the Centers for Medicare and Medicaid Services announced early last month that it would take until April 1 to apply the cuts.
An American Hospital Association spokeswoman said the AHA had not calculated the total financial impact to U.S. hospitals because hospital budgets are too different from each other (some hospitals have more Medicare patients than others, for instance). But she said affected hospitals could "look to jobs and access to services" as a result of the snip.
"Do they need to cut back somewhere? That will play out differently for every hospital."
However, the group did co-commission a September 2012 report from the firm Tripp Umbach, which estimated that close to half a million jobs could be lost in the first year of the sequester, either directly at health care organizations or indirectly at companies supported by their business.
The Congressional Budget Office reckoned the cuts in payments for Medicare services would total some $11 billion the first year they went into effect, and reach $16 billion by 2021.
The Medicare cuts also affect the country's electronic health records incentive program. In a talk at HIMSS13 in New Orleans last month, Dr. Farzad Mostashari, the National Coordinator for Health Information Technology, said the cuts would shave $3 million off his department's $60 million budget.
"Absent a furlough in our hard-working staff, it's going to mean we have a major cut in the contracts that we have," he told attendees
. "There's going to be things that the industry expects us to do that providers and patients expect us to do that we simply will not be able to do."