Note: This article was updated Feb. 27 to include new information provided by the Office of Management and Budget and HHS.
Sequestration is set to cut big hunks of spending from hundreds of federal activities, from the Head Start program to a second carrier for the Persian Gulf. Most significantly for home health, the sequestration law also includes an across-the-board cut of up to 2% for Medicare providers.
The deadline to avert sequestration was March 1, but under the law requiring the sequester, the Budget Control Act of 2011, the cut in Medicare provider payments won’t kick in until April 1, an Office of Management and Budget (OMB) spokesman confirms.
Other details on the cut: The provider reductions will be the maximum 2% allowed by the law, an HHS spokesman tells HHL. Payments for home health will be determined by the day of discharge. Payments for discharges on or after April 1 would be reduced by 2%, the spokesman explains.
The 2% cut, once it begins, could be almost as devastating for the industry as the interim payment system (IPS), which preceded the PPS system and closed the doors of nearly a third of agencies between 1998 and 2000, says John Reisinger, owner of Innovative Financial Solutions for Home Health in Tampa, Fla.