Federal Sequester Deadline: March 1st: Medicaid Impacted

The federal sequester deadline is March 1, 2013.  Either major budget cuts will occur or Congress will, again, postpone the deadline. Literally, Congress has just two weeks to avert massive cuts to the federal budget totaling $1.2 trillion.

The legal term “sequester” means the act of seizing valuable property and locking it away for safekeeping. But, since the 80s, the term sequester, when related to the federal budget,  has meant a “seizure” or sequestration of funding.

Upon first glimpse of the federal sequester, it appears that Medicaid is exempt. I mean, according to the federal government, Medicare, Medicaid, and Social Security budgets will not be touched via sequestration.  Whew! That’s a relief!  Isn’t it great that the across-the-board budget cuts will not affect Medicaid? Wait…not so fast….

Under the March 1 federal sequestration, the Department of Health and Human Services (“DHHS”) would be forced to absorb cuts of about $6.6 billion. Isn’t DHHS the agency charged with managing Medicaid? Wouldn’t a $6.6 billion budget cut to DHHS impact Medicaid?  So how exactly is Medicaid exempt?

Medicaid is not exempt. Perhaps, the big general rule was meant to keep Medicaid exempt, but, in reality, Medicaid will be hit just as all other federal budgets.  It reminds me of commercials advertising gym memberships for $9.99/month*.  The asterisk (*) changes the whole deal. In reality, the gym costs $9.99/month as long as you sign up for a 2-year membership and agree to undergo 2 private training sessions for $59.99 each.

In reality, the general rule that Medicaid is exempt* should have a giant asterisk next to it.

Why do I say an asterisk is required? I mean, the fact that DHHS’ budget will be cut by $6.6 billion does not necessarily mean that the Medicaid budget will be impacted. Maybe DHHS will just cut administrative costs and do nothing to the actual Medicaid budget. One can hope, right?

Despite the DHHS budget cuts under the federal sequester, Medicaid will be affected in another latent (or sneaky) way.  Remember when Pres. Obama promised that state Medicaid reimbursement rates would be increased to the federal Medicare reimbursement rates?

If Congress cannot come to another agreement or instigate another delay to federal sequester by March 1, Medicare reimbursement rates to doctors will be reduced by 2% under the automatic cuts.

If budget sequestration is allowed to go into effect on March 1, according to a report released in September by the Office of Management and Budget (“OMB”), it will cut $100 billion from the Medicare program over 10 years, with $11 billion in 2013. The slashes to Medicare will come from program reductions and lower payments to various health care providers rather than beneficiaries.

Lower Medicare physician reimbursement rates!!!! $11 billion in only 2013!

Good thing, the federal government has promised to raise Medicaid reimbursement rates up to the federal Medicare reimbursements rates (Can you read my sarcasm?).

It’s the old bait and switch. We will raise Medicaid reimbursement rate to Rate X and we will decrease Rate X immediately. Yes, read that again. The old bait and switch.

Unless Medicaid reimbursement rates are increased for health care providers accepting Medicaid, health care providers will cease to accept Medicaid.  Medicaid recipients will have no health care providers to seek medical help. We are seeing the decrease of health care providers accepting Medicaid already.

So, what will happen in 2 weeks?

Thank goodness Medicaid is exempt********

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on February 19, 2013, in Affordable Care Act, Congress, DHHS, Federal Law, Health Care Providers and Services, Legislation, Medicaid, Medicaid Costs, Medicaid Expansion, Medicaid Reimbursement, Medicare, Obamacare and tagged , , , , , , , . Bookmark the permalink. 2 Comments.

  1. All statements by government at all levels should probably be accompanied by asterisks. 🙂

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