Hospitals Raise Alarms Over Automatic Cuts to Medicare Budget

  • Revenue already reeling after pandemic year, hospitals say
  • Time running out for Congress to head off reductions

Bloomberg Government subscribers get the stories like this first. Act now and gain unlimited access to everything you need to know. Learn more.

Hospital and doctors’ lobbies are cranking up pressure on lawmakers to forestall planned Medicare cuts, banking on goodwill they’ve garnered during the coronavirus pandemic.

Health-care industry groups say their members can’t absorb cuts to Medicare reimbursements this year because their revenue has been hurt by the virus. Although Congress approved more than $186 billion in relief to the industry, hospitals warn they’re still struggling to stay afloat.

“This isn’t the case of asking for more money; this is a situation of preventing a significant cut in Medicare payments that will exacerbate the financial challenges we’re already facing,” Rick Pollack, president and CEO of the American Hospital Association, told reporters Tuesday.

Hospital and doctors’ groups have been sending letters almost weekly since the start of this year warning about looming automatic budget cuts caused by Congress approving new government spending without offsetting the cost. The industry groups have turned their sizable lobbying arms toward avoiding the Medicare cuts.

Spencer Platt/Getty Images
Hasidic men speak with an elderly patient being brought into New York’s Mount Sinai Hospital on April 1, 2020.

Congress faces a March 31 deadline to avoid the cuts. The House isn’t scheduled to vote again until April and the Senate is expected to break after this week.

Lawmakers allocated $178 billion in relief for hospitals and doctors as part of a 2020 stimulus package and an additional $8.5 billion for rural hospitals earlier this month (Public Law 117-2).

Hospital groups such as the AHA have asked for as much as $35 billion more for that relief fund this year.

U.S. Covid Program Leaves Uninsured With ‘Bills They Can’t Pay’

Keeping Doors Open

David Goldberg, president and CEO of Mon Health System in Morgantown, W.Va., said the relief funds helped his hospital system keep the doors open and pay staff but the pandemic has raised the cost of caring for patients. Prescription drugs and protective gear costs have risen significantly since the start of the pandemic, he said.

The House passed legislation last week (H.R. 1868) to prevent the need for $36 billion in cuts to Medicare next year triggered under a “Pay-As-You-Go” law by the $1.9 trillion pandemic relief law and previous stimulus packages. The majority of Republicans voted against the measure.

Democrats Move to Avert Medicare Cuts Triggered by Stimulus

A 2% Medicare automatic cut, called sequestration, will take effect starting next month and a 4% Medicare reduction amounting to $36 billion will follow in early 2022 if Congress fails to act. The House-passed bill would remove the need for both reductions.

Senate Threshold

Democrats can’t avert these scheduled cuts alone. Unlike the massive rescue package, legislation to avert sequestration will need 60 votes in the Senate, where only 50 members caucus with Democrats.

Pollack said Republican support appears insufficient in the Senate to clear the House-passed bill. He expects the chamber instead to pass a bill this week to address more-immediate Medicare cuts. The House could act in early April, just days after the deadline passes, to avoid any Medicare reductions, he said.

The government has in the past avoided cutting Medicare payments to hospitals and doctors if Congress appears prepared to avert them soon, Pollack said.

Sens. Susan Collins (R-Maine) and Jeanne Shaheen (D-N.H.) have proposed postponing the 2% in cuts until the end of the national emergency related to the Covid-19 pandemic, likely to run through 2021.

To contact the reporter on this story: Alex Ruoff in Washington at

To contact the editors responsible for this story: Robin Meszoly at; Sarah Babbage at

Stay informed with more news like this – from the largest team of reporters on Capitol Hill – subscribe to Bloomberg Government today. Learn more.