Sequestration Delivers Cuts to Family Physicians, Education Programs

April 03, 2013 01:00 pm News Staff

The across-the-board budget reductions called for by the Budget Control Act's (BCA's) sequestration provision took effect on April 1, triggering a 2 percent reduction in the Medicare physician payment rate and a 2 percent cut in graduate medical education (GME) programs.

[Knife cutting through stack of $2 bills]

The 2 percent Medicare physician payment cut applies only to the payment and not to the allowed charge in the Medicare fee schedule, which means the 2 percent cut is imposed on only the 80 percent of the allowed charge a participating physician receives directly from Medicare, according to a document( issued by the AMA. Beneficiary copayments and deductibles will not change, and patient copayment amounts are based on the full allowed amount, according to the AMA.

The 2 percent reduction also applies to others who provide Medicare services, including hospitals, home health services and durable medical equipment suppliers. It is important to point out, however, that the Medicare sequestration cuts are not cumulative, meaning that this year's 2 percent Medicare payment cut will not be followed by another 2 percent cut during the next fiscal year.

According to the AAFP, other cuts are likely to disproportionately affect the primary care workforce. For example, the National Health Services Corps program, which recruits and places physicians in health professional shortage areas, will be cut by 5.1 percent. In addition, Title VII of the Public Health Service Act, the only federal funding program specifically designed to increase the number of family physicians, will receive a 5 percent cut.

The BCA requires $1.2 trillion in federal spending cuts during the next nine years unless Congress and the White House essentially block the cuts by reaching an agreement on budget and deficit spending amounts. It is likely that the current 2 percent cut in Medicare payments will remain in effect through the current federal fiscal year, which ends Sept. 30.

During the past few months, the AAFP has waged a concerted effort to stop the sequestration cuts, launching a grass-roots 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.

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