The Statutory Pay-As-You-Go (PAYGO) rule, part of the Budget Enforcement Act framework and law since 2010, requires that any new legislation must not increase the federal deficit. If it does, automatic across-the-board cuts – called sequestration – are triggered in mandatory spending programs unless Congress takes specific action.
Why the reconciliation bill triggers PAYGO:
🔹 The reconciliation package is estimated to increase the deficit by approximately $3.3 trillion over a decade
🔹 That clear deficit increase means PAYGO kicks in, unless Congress enacts a waiver or blocking measure
Medicare is a federal program that is subject to PAYGO cuts. PAYGO would automatically reduce Medicare spending by up to 4%, across hospitals, providers, doctors, and drug plans ❗
As a healthcare provider, pay attention to the next steps:
1. OMB PAYGO notice is expected around mid-July
2. Congressional action – will they vote on waivers for Medicare?
Historically, when PAYGO triggers sequestration, Congress has often intervened to block the automatic cuts.