While the latest federal budget agreement signed into law earlier this month provides a reprieve from statutory budget caps for certain defense and domestic programs, it extends Medicare sequestration cuts for an additional two years. Specifically, section 402 of the Bipartisan Budget Act of 2019 (P.L. 116-37) extends the 2% across-the-board reduction to Medicare provider and plan payments through fiscal year 2029. Note that for the last year of sequestration, the Medicare savings are “front loaded,” with a 4% reduction imposed during the first 6 months of the fiscal year and no reduction applied during the second half.

Congress has regularly relied on extension of the Medicare sequestration authority to offset the costs of unrelated budget bills. Chances are that this extension will not be the last.

For background on Medicare sequestration policy, see this detailed Congressional Research Service report and our previous sequestration updates.