Senate Votes to Extend Sequestration Suspension

Posted on March 31, 2021 by Jeff Bostic

Last Thursday, the US Senate voted to extend the suspension of the 2% sequestration cut for all Medicare services through the end of 2021. Congress initiated sequestration in 2011 to limit Medicare costs by reducing all payments by 2%. With the onset of the COVID-19 pandemic, the sequestration was suspended for a year by Congress last April 1. The coming expiration of that suspension led to the Congressional activity to extend it further.

The US House had previously approved an extension of the suspension of sequestration. That legislation also included an exemption from “PAYGO” requirements which would kick in on January 1, 2022 due to the level of spending in the American Rescue Plan. The Senate did not include the PAYGO exemption, so the House will have to take up the Senate version after its recess. We expect the House to approve the Senate version, and even though their action will come after April 1 the suspension of sequestration should continue without interruption.

The PAYGO cuts are projected to be 4% for all Medicare services in 2022. We are disappointed that the Senate removed an exemption from this recent legislation. Our partners at LeadingAge will be working the rest of this year to get an exemption passed before cuts take effect.