On March 8, the Center for Medicare & Medicaid Services (CMS) released guidance for provider billing under the Budget Control Act of 2011 or sequestration. According to CMS, the 2 percent Medicare cuts will be applied to fee-for-service (Part A and Part B) claims with dates-of-service or dates-of-discharge on or after April 1, 2013. The claims payment adjustment will be applied to all claims after determining coinsurance, any applicable deductible and any applicable Medicare secondary payment adjustments.

Claims for durable medical equipment (DME), prosthetics, orthotics and supplies, including claims under the DME Competitive Bidding Program, will also be reduced by 2 percent for claims with dates-of-service on or after April 1, 2013.

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. CMS encourages Medicare physicians who bill claims on an unassigned basis to discuss with beneficiaries the impact of sequestration on Medicare's reimbursement.

Across-the-board federal budget cuts were triggered on March 1, because Congress failed to come to an agreement on how to reduce the federal deficit. The 2 percent "sequestration" cuts to Medicare are part of the $1.2 trillion in cuts required by the Sequestration Transparency Act, part of a deal worked out to end last year's debt-ceiling crisis. The cuts are evenly split between defense spending - with spending on wars exempt - and discretionary domestic spending. Medicaid is exempt from the cuts. The mandatory Medicare cuts will result in a savings of $11 billion in 2013. Questions about reimbursement should be directed to your Medicare claims administration contractor.

Contact: Michele Kelly, (213) 226-0338 or mkelly@cmadocs.org.