Medicare 1% soon to be 2% sequestration reduction!
An Act to Prevent Across-the-Board Direct Spending Cuts, and for Other Purposes, signed into law on April 14, 2021, extends the suspension period to December 31, 2021.
The Consolidated Appropriations Act, 2021, extended the suspension period to March 31, 2021.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act suspended the sequestration payment adjustment percentage of 2% applied to all Medicare Fee-for-Service (FFS) claims from May 1 through December 31, 2020.
These Congressional spending reductions were applied to both payments made directly to providers for Original Medicare services and to the monthly payments made to MAOs. CMS issued guidelines to MAOs to explain if and when the MAO could “pass through” the sequestration withholding to providers based on two factors: (1) participating [par] vs. non-participating [non-par] status and (2) payment terms of the contract.
The CMS Guidelines state that:
- If a provider is non-par, the MAO may pass the sequestration reduction through to the provider.
- If the provider is par (i.e. has executed a contract with the MAO), then the MAO must pay the provider in accordance with the terms of the contract.
- If the fee schedule in the contract reflects language that the provider will be paid “a percentage of the published Medicare fee schedule,” then all payments must be calculated in accordance with that provision.
- If the fee schedule in the contract reflects language allowing the MAO to adjust payments for sequestration, then the payment can be reduced up to 2%. An example of an adjustment provision follows:
- Payment to Provider shall be ____% of the current Medicare Allowable net of any adjustments to Medicare payment methodologies, as updated or amended. The final payment amount to Provider shall be reduced in the same manner as the reduction in the final payment amount that CMS is applying to provider payments, e.g., sequestration, pursuant to the Budget Control Act of 2011, or any successor legislation. This provision shall apply for the duration of the time in which sequestration reductions are applied to provider payments.