New Bill Seeks to Extend Medicare Sequester Moratorium

March 15, 2021 - UPDATED 04/16/2021 A bill is seeking to prevent across-the-board spending cuts triggered by the latest COVID-19 relief package, including the 2 percent Medicare sequester reduction, known as sequestration.

The bill, H.R. 1868, was introduced by Representatives John Yarmuth (D-KY), Richard Neal (D-MA), Frank Pallone (D-NJ), and David Scott (D-GA) on Friday, March 12, 2021. If passed, it would extend the temporary Medicare sequester moratorium through the end of 2021 as well as prevent other “budgetary effects” meant to prevent the package from increasing the federal budget deficit.

Signed into law last week, the $1.9 trillion American Rescue Act included several “pay-as-you-go,” or PAYGO, spending cuts per a 2010 federal rule requiring new legislation to not increase the federal budget deficit or reduce the surplus.

Chief among the programs facing these cuts in the latest COVID-19 relief package was Medicare, which is slated to take a $36 billion hit by fiscal year 2022 to offset federal spending increases elsewhere.

Healthcare providers blasted the Medicare spending cuts following House passage of the American Rescue Plan. Leading industry groups, including the American Hospital Association (AHA) and American Medical Group Association (AMGA), said the cuts would harm providers who continue to fight the ongoing pandemic and have faced significant financial losses as a result.

Providers also criticized lawmakers for leaving out an extension to the Medicare sequester moratorium, which was implemented last year to support healthcare organizations during the pandemic and is now set to expire on April 1.

H.R. 1868 would avert many of the spending cuts, including those to Medicare, since PAYGO cuts can be changed through new legislation per federal law.

Additionally, the bill would make technical corrections to the American Rescue plan that would impact healthcare providers.

First, the bill would ensure benefits under section 2104 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act are treated the same way when calculating income for any purpose under Medicaid and the Children’s Health Insurance Program (CHIP).

Second, it would correct the grandfathering deadline for Medicare rural health clinic payment changes in the Consolidated Appropriations Act to include clinics enrolled as of Dec. 31, 2021, rather than Dec. 31, 2019. Rural health clinics that applied for Medicare enrollment by the new deadline would also be grandfathered into the payment policy.

Finally, lawmakers proposed to prevent certain hospitals are “inadvertently” receiving a reduction to their Medicare Disproportionate Share Hospital payments, as currently stated in the American Rescue Plan.

“The legislation I introduced today is largely technical fixes and sequestration adjustments that have historically been bipartisan and noncontroversial,”  Representative and Chairman of the Agriculture Committee Yarmuth said in a statement Friday. 

“When Republicans used reconciliation to pass tax cuts for the rich, Democrats voted with them to avoid sequestration and protect Medicare and other programs despite our strong opposition to the Tax Cuts and Jobs Act. This legislation should have the same outcome, but if Republicans play political games and don't do their jobs, Medicare and the seniors that depend on it will pay the price,” Yarmuth continued.

The AHA is calling on members to support the bill and similar legislation in the Senate.

The bill could be considered on the House floor this week in order to get the legislation enacted before Congress adjoins on March 29 for the Easter recess, the industry group added. The bill also would be subject to reconciliation and would need 60 votes to pass in the Senate.

Democrats took control of the Senate as a result of the 2020 election, but the party has a narrow grip with 48 seats plus 2 Independents who caucus with the Democrats. The Republican Party holds 50 seats.

Bipartisan support for H.R. 1868 and similar legislation will be crucial, AHA stated.

UPDATE: President Biden has signed H.R. 1868, extending the suspension of the Medicare sequestration.