Via – Bill Finerfrock, Executive Director, NARHC

As you know, on March 1st, President Obama issued a sequestration order as required by the Budget Control Act of 2011.  Although for most federal programs the effects of sequestration began immediately, for Medicare Part A and Part B, the sequestration related cuts do not take effect until April 1st.


For Medicare Part B, CMS has been ordered to reduce Medicare outlays for 2013 by $5.1 Billion dollars.  For Part A, the sequester related reduction is $5.6 Billion.


Here is the CMS Guidance explaining how they intend to comply with the sequestration order:


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 listserv message is directed at the Medicare FFSprogram (i.e., Part A and Part B). In general, Medicare FFSclaims 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 DMECompetitive 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.

Important NARHC Announcement on Sequestration and Rural Health Billing