Sequestration Cuts May Worsen Challenges for Not-for-Profit Hospitals
While the federal spending cuts under sequestration are expected to reduce revenues of most health care providers, the cuts could "exacerbate an already challenging operating environment for not-for-profit hospitals" that are facing "low revenue growth" from government and private insurers, according to a new Moody's Investors Service report, Reuters reports (Lambert, Reuters, 4/8).
The sequester involves about $1 trillion in across-the-board spending cuts, including a 2% reduction to all Medicare reimbursement rates, that took effect on April 1 (California Healthline, 4/8).
According to Reuters, this is the fifth year that Moody's has projected a negative outlook for not-for-profit hospitals, which primarily serve low-income populations. The report noted that the Medicare reductions likely will lower the revenues of hospitals, physicians and other health care providers by $11 billion in 2013.
In addition, Moody's reported that not-for-profit hospitals could be affected again during congressional negotiations to reach a deal on the U.S. debt and deficit. Further, not-for-profit hospitals face a "perennial risk that the so-called 'doc-fix' will not be renewed, which would force reductions to physician reimbursements," the report stated (Reuters, 4/8).
Advocates Rally for Medical Research
Meanwhile, thousands of advocates for medical research gathered in Washington, D.C., on Monday to urge lawmakers to increase federal funding for disease research, CQ HealthBeat reports. The sequester includes about $1.5 billion in cuts to NIH's budget in fiscal year 2013 (Reichard, CQ HealthBeat, 4/8).
Several lawmakers joined representatives from nearly 200 organizations at the rally. They warned that further reductions and instability in NIH's funding would delay medical innovation and potentially set research back a generation, according to The Hill's "Healthwatch" (Viebeck, "Healthwatch," The Hill, 4/8).
Rally attendees also noted that Congress' failure to restore the funding would drive up medical costs and cause the economy to deteriorate (Reichard, CQ HealthBeat, 4/8).
CMS Will Not Issue Furlough Notices, Official Says
In related news, a CMS official recently said the agency has no plans "at this time" to issue furlough notices for its employees in response to the automatic spending cuts required under the 2011 Budget Control Act.
Instead, the agency is taking "other steps to mitigate the effect" of the sequester, the official said (CQ HealthBeat, 4/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.