News and Insights

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Physicians who treat Medicare patients will see a two percent pay cut come April 1 because of the sweeping cuts mandated by the Budget Control Act of 2011. The so-called “sequester” mandates cutting $85 billion across-the-board from the federal budget, and went into effect on March 1 when Congress failed to reach agreement to prevent these cuts.

The Centers for Medicare and Medicaid Services (“CMS”) says the delay in implementing the two percent pay cut to doctors is due to the time necessary to implement the required changes. CMS estimates that Medicare providers will lose up to $11 billion as a result of the sequester. Medicare providers will recoup only 98 cents on the dollar for services provided to Medicare beneficiaries.

Additionally, a report released by the American Hospital Association, the American Medical Association, and the American Nurses Association says the cuts will have an even broader impact. The report, conducted by the economic research firm Tripp Umbach, concludes that the cuts could lead to a loss of more than 750,000 jobs in the healthcare industry. The research points to reduced purchases of healthcare goods and services, leading to the lay off of workers in the industry.