Impact of the Sequester on CMS Funding

On March 1, 2013, the President issued a sequestration order that cuts $85 billion in federal budgetary resources for FY 2013.

By law, on March 27, 2013 Medicare Trust Fund spending will be cut 2 percent and Medicaid will be exempt.

Other CMS  expenditures are subject to the sequester on March 1, 2013. The CMS administrative budget falls into the non-exempt non-defense category.  In the report, OMB states that sequestration requires an annual  5.0 percent reduction in discretionary programs and a 5.1 percent reduction in mandatory programs.  Because these cuts must be made over a 7 month period, OMB estimates the effective percent reductions will be 9 percent for non-exempt nondefense programs.

Following is the official impact of the cuts on CMS in the OMB sequestration report.

The OMB report states that “There is no requirement that sequestration be applied to equally to each type of budgetary resource within a budget account”. A variety of news reports and comments from supporters and critics of health care reform have discussed the discretionary authority of the Secretary to move CMS money around in the various accounts.  In particular, these reports emphasize the Administration’s interest in assuring that Health Care Reform gets off the ground in 2014 and that funding be found for the Federal exchange which was not previously appropriated.  Other ACA related cuts include: $51 million in the Prevention and Public Health Fund and $267 million in IRS enforcement funding.

Click here for the OMB report on the impact of sequestration.

Resources

Listen in as Gorman Health Group Senior Vice President Bill MacBain shares an update on the sequester, what GHG thinks is likely to happen next, and the potential impact on Medicare Advantage.

Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.