Mandatory Payment Reductions in the Medicare Fee-for-Service Program - "Sequestration"

CMS Article PE201303-02

To All Health Care Professionals, Providers, and Suppliers

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 two (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 Fee-for-Service (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 two (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 two (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 two (2) percent payment reduction, Medicare's payment to beneficiaries for unassigned claims is subject to the two (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.

Home Care Accounting Solutions is prepared to address this issue.

Medicare PPS:

Step 1 for Non-Cloud Customers: Install the latest HAS Update

Note – Cloud customers start at step 2

Step 2: Go to File > File Maintenance > Entity – Choose Insurance

Go to the Ins-Rate Tab

Press the ‘Add’ Button

Add Initial PPS RAP Claim

Change the Start Date to 4/1/2013

Change the ‘Type’ to Pct

Under Rate enter 98

Check the ‘Allow’ box

Hospice Customers:

             1.    For Non-Cloud Customers: Install the latest HAS Update

Note – Cloud customers start at step 2

2. Go to File > File Maintenance > Charge Code

3. End date the existing rate on 3/13/13

4. Press ‘Add’ and create a new rate at 2% reduction starting 4/1/13 (Gross and Net should agree)

Note: This must be done for all per diem rates (i.e. Respite, Inpatient, Continuous)

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