This Week – March 2, 2013

This Week in Washington DC:

  1. Sequestration Basics: How is Your Practice Impacted?

Congress Misses March 1 Deadline to Avert Automatic Spending Cuts

Background: In 2011, and in order to raise the federal borrowing debt ceiling, House Republicans, Senate Democrats, and President Obama all agreed to create a ‘Joint Select Committee on Deficit Reduction’ to reduce the deficit by at least $1.2 trillion over a 10 year period. The Administration and Congress both touted and supported the fall-back provision as well should this panel fail to develop a plan, which was automatic reductions in federal outlays, or “sequestration,” beginning January 2013. The Joint Select Committee on Deficit Reduction failed.

Congress passed legislation in December 2012 to avert the “fiscal cliff,” to extend 2012 Medicare physician fee schedule payments for 1 year (delaying the SGR cuts), and also to delay sequestration until March 1, 2013. Congress failed to act by March 1, 20103 to address sequestration.

What is “sequestration”? Sequestration is a process of automatic and across-the-board spending reductions and cuts to enforce these budgetary policy requirements. This is not new. It was first authorized in 1985 as part of the Balanced Budget and Emergency Deficit Control Act of 1985. Sequestration can also occur under the Statutory Pay As You Go Act of 2010 (PAYGO).

How is the GI Clinician impacted? This is to-be-determined but the law limits the cuts in the Medicare program up to 2%. However, this is an annual cut over the next 10 years, and can include up to a 2% cut in the Medicare physician fee schedule in addition to a 2% payment reduction under the Medicare facility fee payment schedule. Ultimately, the Office of Management and Budget (OMB) must determine the spending reductions/cuts in each program in order to achieve the required $1.2 trillion in savings. While the law provides a list of programs that are exempt from sequestration, it provides no definitive list of programs that must be impacted by sequestration. If OMB determines that the Administration can achieve savings targets with across-the-board reductions or freezes in spending that are less than 2%, then the Medicare provider cuts will also be less than 2%. However, if this annual percentage is greater than 2% to achieve federal savings, cuts to the Medicare program are limited to 2%.

This reduction would be in form of lower Medicare Part B payments. This payment would be considered “payment in full” and the provider may not charge the Medicare beneficiary any additional amounts to make up for this reduction in fees.

Please click here for a summary of 2013 Medicare reimbursement (pre-sequestration) for selected GI services:

What programs are exempt from sequestration? Among the programs specifically exempted from sequestration:

  • All programs administered by the Veterans Administration (VA), including medical care. This appears to include civilian medical providers under the VA pay schedule.
  • Medicaid.
  • Medicare Part D subsidies and “catastrophic converge” subsidy payments. 
  • Medicare beneficiary benefit structure and coverage.
  • Medicare qualified income (QI) premiums, which are payments to states to help cover certain low-income Medicare beneficiaries.

ACG will update its membership when new information becomes available. ACG will continue to be the voice for clinical gastroenterology on Capitol Hill as this sequestration process moves forward.

Please stay tuned for further updates. Please also share and discuss your thoughts with fellow ACG members on the ACG GI Circle. To login and share your comments, go to and sign in as a member. Once you have done so, click here and then click the orange "Visit ACG GI Circle" button to be taken to the GI Circle site. If you have not yet activated your ACG GI Circle account, please email us at

Contact Brad Conway, VP Public Policy, with any questions or for more information.

Brad Conway