The President and congressional leaders have not had any further meetings since last Friday on how to prevent sequestration which went into effect on March 1. On March 6, the U.S. House of Representatives passed a continuing resolution for the rest of the fiscal year which included the reduced spending under sequestration. The move by House Republicans is intended to take the possibility of a government shutdown off the table while maintaining negotiations on federal spending reductions focused on sequestration.

The Centers for Medicare and Medicaid Services (CMS) just issued a notice on how the Agency plans to implement the 2% reduction in Medicare payments for health care providers under sequestration. Below is the notice from CMS confirming the April 1 effective date and other details.

Mandatory Payment Reductions in the Medicare Fee-for-Service (FFS) Program – “Sequestration”
The Budget Control Act of 2011 requires, among other things, mandatory across-the-board reductions in Federal spending, also known as sequestration. The American Taxpayer Relief Act of 2012 postponed sequestration for 2 months. As required by law, President Obama issued a sequestration order on March 1, 2013. The Administration continues to urge Congress to take prompt action to address the current budget uncertainty and the economic hardships imposed by sequestration.

This message is directed at the Medicare FFS program (i.e., Part A and Part B). In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment. Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.

The claims payment adjustment shall be applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments. Though beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction, Medicare’s payment to beneficiaries for unassigned claims is subject to the 2 percent reduction. The Centers for Medicare & Medicaid Services encourages Medicare physicians, practitioners, and suppliers who bill claims on an unassigned basis to discuss with beneficiaries the impact of sequestration on Medicare’s reimbursement.

Questions about reimbursement should be directed to your Medicare claims administration contractor. As indicated above, we are hopeful that Congress will take action to eliminate the mandatory payment reductions.