Sequestration Cuts Medicare Reimbursement Beginning April 1


imagesNewswise — The federal budget sequester went into effect March 1 after a lack of Congressional action to avoid the automatic spending cuts. Effective April 1, Medicare payments to hospitals, doctors, and other health care providers will be reduced by 2%.

In the weeks leading up to the March 1 deadline, the Senate twice voted down proposals to halt the automatic, across-the-board spending cuts to government programs. Their lack of agreement on a deficit-reduction policy was followed by the signing of an executive order to initiate broad cuts to government spending.

The sequestration order directs government agencies, including Medicare, to cut their budgets. Most cuts to federal agencies and programs will not begin overnight—some agencies will have until October 1 to determine where to cut spending. However, it’s anticipated that Medicare providers will see the impact of sequestration by mid-April. The Center for Medicare and Medicaid Services (CMS) will implement the 2% cut, reimbursing Medicare claims at 98 cents on the dollar. A CMS spokesperson anticipates that the sequester reductions will result in $11 billion in lost revenue to Medicare doctors, hospitals, and other providers.

Specific details of the Medicare sequester have not yet been made public, including: Whether the 2% cut will be applied to allowed charges under the Medicare physician fee schedule (and so affect beneficiary copayments); If the 2% cut will be applied only to the physician’s Medicare claims payment; Whether the cuts will be applied to claims with a date of service on or after April 1, or to all claims payments made on or after April 1.

In a statement released on March 1, American Medical Association President Jeremy Lazarus said, “Both Medicare beneficiaries and providers will feel real pain from the cuts. Sequestration will widen the already enormous gap between what Medicare pays and the actual cost of caring for seniors.”

Congress and the president could halt some or all of the spending cuts, but it may take a surge of public indignation to motivate them to do so. Members of the American Association of Neuromuscular & Electrodiagnostic Medicine (AANEM) have been encouraged to contact their elected officials to share their concerns over the impending cuts, which come on the heels of a significant decrease in Medicare reimbursement for EDX services.