Biden, Congress Extend Medicare Sequestration Holiday Through 2021

The long and winding saga behind the Medicare sequestration holiday for home health providers and others has come to a close.

On Tuesday, the U.S. House of Representatives overwhelmingly voted by a 384-38 margin in favor of a continued sequestration delay. The legislation was one of two measures introduced since early March aimed at delaying the return of Medicare sequestration, which is an automatic 2% cut for all health care providers paid through Medicare.

President Joe Biden officially signed the legislation on Wednesday. Because the U.S. Centers for Medicare & Medicaid Services (CMS) has been expecting Congress to pass such legislation, it has not been enforcing the 2% cut despite the holiday’s expiration coming earlier this month.

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Organizations such as the Partnership for Quality Home Healthcare (PQHH) and others have thrown their support behind the legislation.

“The Partnership applauds the U.S. House for passing sequestration relief and urges President Biden to promptly sign the bill into law to ensure providers continue to receive relief from these pending funding cuts,” Joanne Cunningham, executive director of PQHH, said in a press release.

Broadly, CMS has been cutting Medicare reimbursements to home health providers by 2%, as directed by Congress, since 2014. Under the law, payments that exceed Medicare’s cap must be returned to CMS.

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Last year, the Coronavirus Aid, Relief and Economic Security (CARES) Act halted the automatic 2% cut to all Medicare providers. In December, this temporary moratorium was extended through March 2021.

The purpose was to enable home health providers to have the resources to provide care during the COVID-19 emergency while staying afloat financially.

Providers may have slowly begun to experience a return to normalcy, but Cunningham believes more time is needed to fully stabilize the home health industry, which also had to adapt to the Patient-Driven Groupings Model (PDGM) in 2020.

“While the COVID-19 crisis has underscored the value of care delivery in the home, providers continue to struggle with the impacts of the 4.36% PDGM payment cut that took effect in 2020 and again in 2021,” Cunningham said. “The sequestration moratorium provided by Congress has been incredibly valuable to the home health sector due to the challenges of providing care during the PHE, coupled with the PDGM payment cuts this year and last. This continued relief will help stabilize the delivery of home health to Medicare’s most vulnerable seniors.”

In total, this legislation will defer $36 billion in previously scheduled Medicare cuts in 2021, according to an analyst note from Stephens.

Small providers, in particular, would benefit from a continued delay, according to Peter Miska, president of the Illinois-based Phoenix Home Care LLC.

“The continued delay of sequestration until the end of the year is very important for home health agencies, especially smaller providers dealing with rising labor, compliance and PPE costs,” Miska told Home Health Care News. “With government programs becoming more limited and PDGM affecting the revenue cycle, agencies will realize that they don’t have a positive margin or cash flow. Patients and referral sources may start to feel access issues.”

Phoenix Home Care is a Medicare-certified home health care provider that serves eight counties in Illinois.

In March, the House previously passed different sequestration legislation via a 246-175 vote. The key difference between the two pieces of legislation is, in addition to extending the sequestration delay, the previously introduced bill also dispensed with statutory pay-as-you-go (PAYGO) budget enforcement measures.

The PAYGO rule requires new legislation not to raise the federal budget deficit or lower the surplus. The bill passed on Tuesday in the House and signed on Wednesday by the president does not address the PAYGO issue, sources confirmed to HHCN.