The fiscal trap that members of Congress and the president set for themselves will punch a 2% hole in one of the federal electronic health-record incentive payment programs under the American Recovery and Reinvestment Act, a federal official has confirmed.

The cuts, called the sequester, include an across-the-board reduction in Medicare payments. EHR incentive payments distributed under Medicaid won’t be affected.

On March 1, President Barack Obama signed an order for sequestration that set in motion automatic federal budget cuts required by the Budget Control Act of 2011, the legislative effort passed by Congress with cuts promoted at the time to be so draconian that they would compel both Republicans and Democrats to reach a budget compromise.

That didn’t happen, and now, Medicare providers should expect cuts in payments for services provided on or after April 1. 

Most hospitals participate in both the Medicare and Medicaid portions of the EHR incentive payment program, but 181 are listed as “Medicare only” providers on the latest CMS report on program expenditures.

On average, these Medicare-only hospitals have been paid $1.87 million each, which means a 2% cut would amount to about $37,500 for similarly compensated hospitals once the cuts are applied.

The cut would amount to a few hundred dollars for physicians and other “eligible professionals.” The top EHR incentive payment for them under Medicare is now $18,000, so the 2% reduction would cost them $360.

In an address to the Federation of American Hospitals on Tuesday, Acting CMS Administrator Marilyn Tavenner touched on the EHR incentive payment program, noting the CMS this year will “spend a lot of time around education and around the audit process.”

Tavenner, who is scheduled to speak Wednesday at the HIMSS conference in New Orleans, said “We are fully committed to the program” but will be “pausing and reflecting” on problem areas, such as appropriate coding levels, “and trying to increase the education; make sure we have the vendors on board.” She said there also will be “some small targeted audits to make sure it’s being done appropriately.”

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