Congress should prevent planned Medicare spending reductions triggered by the American Rescue Plan Act of 2021, the American Medical Association (AMA) said in a March 17 statement. The reduction, which could be up to 4%, would be enacted under the statutory Pay-As-You-Go (PAYGO) provision, which prevents new legislation from increasing the federal budget deficit.
Congress has passed legislation that increased the federal deficit several times since the PAYGO law was enacted in 1990, according to an American Hospital Association (AHA) fact sheet released in March. However, in all previous instances Congress waived the reductions and prevented a PAYGO sequester.
The Congressional Budget Office estimated that a PAYGO sequester in 2022 would trigger a 4% reduction in Medicare spending, or approximately $36 billion.
Hospitals and other provider organizations are projected to face significant financial losses due to the COVID-19 pandemic throughout 2021 and it remains unclear when they will recover, the AMA and the AHA argue.
The House of Representatives passed a bill on March 19 that would exempt the American Rescue Plan Act of 2021 from the PAYGO rule. The bill was received in the Senate March 22.