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Sequestration cuts extend beyond Medicare fee-for-service payments



May 13, 2013
Area(s) of Interest: Payor Contracting Practice Management Public Payors 

By now, most physicians are likely aware of the 2 percent across-the-board reduction in Medicare physician reimbursement for all claims with dates of service on or after April 1. These cuts are the result of the Sequestration Transparency Act of 2012, which was part of a deal worked out between President Obama and Congress to address the debt ceiling crisis. The California Medical Association (CMA) has recently learned that the cuts are also being applied to Medicare electronic health record (EHR) incentive payments and many Medicare Advantage plans are passing on the 2 percent cuts as well.


According to Centers for Medicare and Medicaid Services (CMS), the 2 percent reduction will be applied to Medicare EHR incentive payments for reporting periods that end on or after April 1, 2013. If the final day of the reporting period occurs before April 1, 2013, those incentive payments will not be subject to the reduction. Medicaid is exempt from the sequestration cuts.


CMA has also confirmed that Aetna, Anthem Blue Cross, Health Net and United Healthcare are passing on the 2 percent sequestration cut to physician payments for Medicare Advantage patients. While Anthem, Health Net and United notified physician by mail of the change, to date the only notice Aetna has provided is via a reason code on the Explanation of Benefits. CMA has inquired with CMS about whether formal written notice is required.


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