HIMSS13: Sequester Will Affect Medicare EHR Pay, ONC Budget

Kate Ackerman, iHealthBeatby Kate Ackerman, iHealthBeat Managing Editor

NEW ORLEANS — There were nearly 60 education sessions at the Healthcare Information and Management Society’s Annual Conference on Tuesday, not to mention the more than 1,100 firms displaying their products in the exhibit hall, but it was a brief reference near the end of a CMS Town Hall that had HIMSS13 attendees all abuzz.

Elizabeth Holland — director of the HIT Initiatives Group in CMS’ Office of E-Health Standards & Services — confirmed that Medicare meaningful use payments will be subject to mandatory cuts under budget sequestration, including a 2% reduction to Medicare payments.

On Friday, President Obama signed an order to initiate the $85 billion in spending cuts for the fiscal year ending on Sept. 30. The mandated cuts are the first installment of nearly $1 trillion in across-the-board reductions.

While the news about the Medicare meaningful use payments is not entirely surprising, there had been some speculation that electronic health record incentive payments might be spared because the meaningful use program could be considered mandatory, as its funding is specified by statute.

Chantal Worzala, director of policy at the American Hospital Association, said that when the sequester first became law in 2011, “we looked at it as something that would affect all Medicare payments,” including meaningful use.

However, she noted that recently there were some questions raised about how the sequester would affect Medicare meaningful use payments, adding, “there definitely was a period of uncertainty.”

Jeffery Smith — assistant director of public policy at the College for Healthcare Information Management Executives — said, “This was big a surprise to me.” He added, “The consensus I was hearing was that because these dollars … were not in the general Medicare pot for reimbursements,” they’d likely be safe.

Worzala said, “As far as I know, today is the first time we’ve gotten an official statement from CMS” on the issue.

Holland said that under sequestration, Medicare will make 2% cuts to all payments that are processed after April 1. She added, “It will not matter when you attested [to meaningful use]; it will matter when the payment is filed.” Medicare files payments about once a month, Holland noted.

Holland said the Medicare payment cuts will have “big ramifications moving forward.”

Medicaid meaningful use payments will not be affected, as that program is exempt from the sequester’s automatic cuts.

Worzala said that hospitals have been “working very, very hard” to get to meaningful use and that AHA is “very disappointed” that incentive payments will be “less than promised.”

She said that the financial picture for hospitals is very challenging right now, noting that the federal government is “scaling back Medicare payments quite significantly” through the sequester, the Affordable Care Act and the deficit reduction bill signed into law in January. As a result, hospitals might “find it difficult to commit” the necessary resources to EHR implementation, Worzala said.

Smith said CMS officials told him they’re not sure the exact percentage that Medicare meaningful use payments will be cut but that it will be limited to 2%.

He said, “This isn’t going to be a material hit on the program, and I don’t think providers are going to necessarily feel it, but it is troubling that Congress would roll out a program like meaningful use with a very defined, very structured … payment regime and then have this happen.”

Smith said, “Generally speaking, I don’t think it’s going to be a big deal. But I do think it’s kind of a troubling trend.”

ONC To See $3M Budget Cut Under Sequester

At a media briefing on Wednesday, National Coordinator for Health IT Farzad Mostashari said, “This sequester is going to hurt.”

Last year, the Office of the National Coordinator for Health IT had a budget of $60 million — the same amount of funding it received in 2004 when the office was formed through an executive order by President George W. Bush, Mostashari said.

Under the sequester, ONC will receive a $3 million budget cut, reducing its funding to $57 million, he said.

“Absent a furlough, it’s going to mean that we have a major cut in the contracts we have,” Mostashari said, adding, “There [are] going to be things that the industry expects us to do and that patients and providers expect us to do … that we simply won’t be able to do.”

Kate Ackerman is the Managing Editor for iHealthBeat where this article first was published. Follow on Twitter @iHealthBeat.