As the news of a budget deal was announced in a press conference held by Wisconsin’s Representative Paul Ryan and Washington’s Senator Patty Murray, questions immediately turned to the details of the compromise, with Medicare set to lost approximately $22.16 billion in the near future.
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Increasing federal spending by $63 billion over the course of the coming two years, the budget deal was almost a middle-of-the-way compromise between the originally-proposed House and Senate versions. One of the key successes of the budget is its significant bite out of the recently imposed sequester. The terms of the sequestration that came into effect in March were that between 2013 and 2021 the federal budget was to be automatically cut by about $109 billion every year, totaling $1.2 trillion over the ten-year period, with over nine percent coming from defense spending, more than 7.5 percent coming from entitlement programs, and Medicare losing about two percent.
With the new budget deal, these sequestration cuts will now be worked into reforms of federal programs and at least for fiscal years 2013 and 2014 about two-thirds of the automatic cuts will be redirected. The most talked about added revenues are set to come from increased airline travel fees and a greater contribution from federal employees to their retirement funds, among other sources.
However Medicare, with sequester cuts totaling around $22.16 billion for the next two years – about two percent of its biannual budget – is one of the few major programs to come out on the bottom of this deal. It is in the remaining one-third of federal programs not to be affected by the current deal. Congressional staff are reported as saying cuts to the Medicare program were the lesser of all other evils.
And it is not Medicare patients who will be affected by cuts to the program; healthcare providers will feel the full brunt of this as the federal government reduces its reimbursement payments by two percent annually. This means a two percent revenue decrease for any doctors, hospitals, long-term care facilities, or any other entity which treats Medicare patients- a move that is potentially devastating for facilities whose primary clients are Medicare recipients.
As for the medical billing and coding industry, any loss experienced by their clients will surely be felt in a trickle-down effect. The current budget deal comes amidst a turbulent time for the medical service industry in general as the Affordable Care Act begins to be implemented which could have a far larger impact on billing and coding. Although while the ACA may turn out to have a positive impact on the medical billing and coding industry, the current cuts to Medicare certainly will not.
However this recent budget compromise is just a starting point, and federal spending could be back in the spotlight by March 2014, the soonest date the Treasury predicts we may face another showdown over the debt ceiling. And the current deal is only for about two years, at which point another budget will need to be put together. And there is always the chance of proposals in the meantime that could affect the Medicare program.