Here Is What Sequestration Cuts Mean for Family Physicians, Says AAFP

Academy Outlines Programs Affected by Sequestration

March 08, 2013 05:05 pm News Staff

The inability of Congress and the White House to reach a budget deal to block the Budget Control Act's sequestration cuts means that physicians now are facing an impending 2 percent cut in the Medicare physician payment rate as well as reductions to other programs that directly support the education and training of family physicians, according to the AAFP.

Without congressional intervention, the sequestration will result in a 2 percent cut in Medicare payment on April 1. The AAFP points out that "A small group practice receiving $280,500 in Medicare revenue for 2012 would receive $16,929 less in total revenue for 2013."

In addition, graduate medical education (GME) programs will be cut by 2 percent, according to the AAFP. "Most likely, major across-the-board reductions in funding to GME will impact the primary care workforce disproportionately."

The sequestration also will cut other primary care programs by 5 percent or more, including a 5.1 percent cut to the trust fund of the National Health Service Corps, which recruits and places medical professionals in health professional shortage areas.

Title VII of the Public Health Service Act is expected to receive a 5 percent cut. Section 747 of Title VII is the only federal program that provides funds specifically to academic departments and programs to increase the number of primary care physicians. "(The) funding reduction (for Title VII) will prevent the Health Resources and Services Administration from offering new primary care training grants," says the AAFP. "Over 2,000 primary care medical students and physician assistant trainees will be adversely affected by the funding loss."

Although the sequestration technically went into effect on March 1, the cuts to Medicare payments will not be implemented until April 1, according to CMS. When enacted on April 1, the reductions will result in $11 billion in lost revenues to Medicare physicians, hospitals and other health care providers.

However, certain portions of Medicare spending that affect low-income beneficiaries are exempt from the sequestration, including spending on low-income and catastrophic subsidies under Part D and on the qualified individual subsidy. Medicaid payments are not affected by the cuts.

Before implementing the sequester for Medicare Parts A and B, CMS says it needs to provide one to two weeks advance notice to claims administration contractors to give them enough time to adjust their payment systems. Additionally, the agency is prepared to take sequestration into account when it calculates the April monthly payment amount for Part C and D plans on March 21 and to communicate the amount to health plans on March 22.

During the past few months, the AAFP has waged a concerted effort to stop the sequestration cuts by launching a grassroots campaign and issuing Speak Out alerts to rally AAFP member opposition to the reductions. AAFP leaders also have been meeting with House and Senate leaders to argue forcefully against the reductions.

In a recent e-mail to AAFP members, AAFP President Jeff Cain, M.D., of Denver, said the AAFP "will continue to do all we can to advocate on behalf of family medicine."

Cain noted that AAFP members sent more than 1,100 letters to Congress regarding concerns about the sequester. The letters informed legislators what the cuts would mean for family physician practices, residency programs and students across the country, thereby underscoring what family medicine stands to lose.