Medicare sequestration and rising costs threaten access to care for rural Texans


Boram Kim


The Center for Healthcare Quality and Payment Reform estimates more than 600 rural hospitals in America are in jeopardy from Medicare sequestration and waning finances in a new report.

According to the center’s findings, Texas has the highest number of rural hospitals at risk of closure in the country with 69.


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Congress implemented a 1% reduction to all Medicare payments on April 1st as part of efforts to move forward with federal sequestration cuts to the program, which were suspended in December due to the COVID-19 Public Health Emergency (PHE).

While the PHE has been extended until July, the suspension of the Medicare sequester has not. Reimbursement reduction will scale up to 2% on July 1 and 4% by 2023 via Pay-As-You-Go Act scheduling.

Hospital advocates say while eliminating the sequestration would help, more must be done to keep facilities viable. Many hospitals are struggling with lower reimbursement levels from private insurers, declining COVID-19 related funding, lower patient volumes, and increasingly higher operating costs. 

“Higher Medicare payments would be beneficial for rural hospitals, but eliminating the 2% sequestration reduction would only increase the margin at a typical rural hospital by about one-half percent, far short of the losses most small rural hospitals are facing,” reads the Center for Healthcare Quality and Payment Reform’s report.

The Texas Medical Association (TMA) opposed the Medicare cuts in a letter to Congress last month, stating the sequester would “needlessly threaten Medicare beneficiaries’ access to care.”

In addition to eliminating Medicare sequestration, the association urged Congress to establish reliable, annual updates to physician payments each year that account for inflation and practice costs.

The American Hospital Association published a report this week that highlighted inflation’s toll on hospitals and health systems and rising costs during the pandemic. Total hospital expenses per patient grew 20.1% from 2019 to 2021.

“Most of the nation’s hospitals were operating on razor thin margins prior to the pandemic; and now, many of these hospitals are in an even more precarious financial situation. Regardless of potential new surges of COVID-19, hospitals and health systems continue to face workforce retention and recruitment challenges, supply chain disruptions and exorbitant expenses,” said the AHA in its report.

The AHA also called on Congress for additional support for hospitals to sustain services to patients and communities.