Hospitals, insurers would bear brunt of automatic Medicare cuts

Automatic Medicare cuts triggered by the congressional supercommittee’s failure would hit hospitals harder than any other health industry, according to an analysis from Avalere Health.

The report puts hard numbers to across-the-board cuts that stakeholders have mostly viewed in broad, general terms. But Avalere chief executive Dan Mendelson cautioned that the figures also assume the automatic cuts will actually happen — an assumption he’s not ready to make.

The supercommittee’s cuts, if it had agreed on a deal, likely would have started next year. But sequestration isn’t scheduled to begin until 2013.

“It gives the providers a chance to fight another day,” Mendelson said.

The automatic Medicare cuts are reductions in payments to doctors, hospitals and other healthcare providers. The trigger does not include any direct cuts to Medicare benefits.

According to the Avalere analysis, the provider cuts break down as follows:

• 32 percent to inpatient hospital care

• 15 percent to Medicare Advantage plans

• 12 percent to physicians

• 8 percent to outpatient hospital care

• 7 percent to nursing homes

• 4 percent to home health agencies

• 3 percent to a small portion of the Medicare prescription drug benefit not exempt from the trigger

Sequestration does not trigger cuts to Medicaid or the Children’s Health Insurance Program. Mendelson agreed with other analysts who have said some health sectors — notably hospitals — could have been hit much harder by an actual supercommittee agreement than if the automatic cuts take effect, largely because the 12-member panel likely would have tackled Medicaid.

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