AUSTIN (KXAN) — Medicare will cut reimbursements for hospitals and other providers 2 percent across the board starting Tuesday, in accordance with the federal sequester.
This is the second year Medicare has had to cut down reimbursements due to the sequestration. The payment cut is expected to cost Texas hospitals $268 million in 2014, according to the Texas Hospital Association. Texas hospitals lost $262 million from the cut in 2013.
This funding cut was meant to expire in 2021, but it was extended to 2023 as a source of revenue for the “doc fix” – a measure passed by Congress to temporarily delay doctor reimbursements under Medicare. The “doc fix” is the latest attempt to prevent sharp drop-off in Medicare payments since the Sustainable Growth Rate system passed in 1997 failed due to health-care costs far outpacing economic growth in recent years.
For Texas hospitals, the impact of this ongoing reduction in Medicare reimbursement is compounded by other federal and state funding cuts to Medicare and Medicaid. At the same time, Texas hospitals carry a $5.5 billion uncompensated care burden as a result of the state’s persistently high number of uninsured.
The Texas Hospital Association president released a statement on Tuesday that said “state inaction on coverage expansion coupled with billions in federal and state funding cuts are creating an untenable situation for hospitals.” He added if hospitals are “forced to lay off staff, reduce or eliminate services or close their doors permanently, patients will suffer as will local communities and the state’s economy.”