Moody's: Sequester's Medicare cuts threaten hospitals

Agency has maintained a negative outlook for not-for-profits for past five years

Medicare under from budget sequestration could "exacerbate an already challenging operating environment for not-for-profit hospitals" that are facing "low revenue growth" from government and private insurers, Moody's Investors Service said this week.

The sequester involves about $1 trillion in across-the-board spending cuts, including a 2% reduction to all Medicare reimbursement rates, that took effect on April 1.

Altogether, sequestration is expected to lower the revenues of hospitals, physicians, and other health care providers by $11 billion in 2013.

In addition, Moody's reported that not-for-profit hospitals could be affected again during congressional negotiations to reach a deal on the U.S. debt and deficit. Further, not-for-profit hospitals face a "perennial risk that the so-called 'doc-fix' will not be renewed, which would force reductions to physician reimbursements," the report says.

According to Reuters, this is the fifth year that Moody's has projected a negative outlook for not-for-profit hospitals. The agency attributes the outlook to the recession's lasting impact on patient volumes, as well as challenges presented by payment changes for hospitals (Lambert, Reuters, 4/9).



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