Medicare Sequestration Payment Reductions | AHA (2024)

FAQs

Is the 2% Medicare sequestration still in effect? ›

1. How long is the 2% reduction to Medicare fee-for-service claim payments in effect? The sequestration order covers all payments for services with dates of service or dates of discharge on or after July 1, 2022, will continue until further notice.

Sequestration - This code is typically triggered when there is a reduction in federal payment due to sequestration. Sequestration refers to the automatic spending cuts that are implemented by the government to reduce the federal budget deficit.

However, it's important to note that the CF includes a 1.25% increase required by Congress to help mitigate the 2024 payment cuts. Medicare providers face other Medicare cuts known as sequestration (2% reduction) and statutory "Pay-As-You-Go", or PAYGO (4% reduction).

The beneficiary remains responsible to the provider for this full amount. However, sequestration affects how much Medicare reimburses the beneficiary. The non-participating fee schedule approved amount is $95.00, and $50.00 is applied to the deductible.

In CBO's estimation, they have not, and a sequestration will not be required for 2024. CBO provides an update to an earlier estimate of the effects of a potential sequestration under the caps established by the Fiscal Responsibility Act of 2023.

2% Payment Adjustment (Sequestration) Begins July 1, 2022.

Advocacy by ASHA and other groups has led to a law, the Consolidated Appropriations Act, 2024 (H.R. 4366), that will reduce Medicare Part B cuts from 3.4% to 1.7% for the remainder of 2024.

116-260), an Act to Prevent Across-the-Board Direct Spending Cuts, and for Other Purposes (P.L. 117-7), and the Protecting Medicare and American Farmers from Sequester Cuts Act (P.L. 117-71) also suspended the sequestration of Medicare from May 2020 through March 2022.

The payment reduction, referred to as sequestration, is applied to the Net Capitation Payment (NCP) made to the plans, including MAOs. Therefore, Medicare rates and fee schedules remain unaffected by sequestration.

In November 2023, CMS finalized a 3.4% decrease in the physician fee schedule conversion factor, a key aspect of payment rates under the Medicare program, resulting in a 1.25% decrease in overall payments that is expected to vary by specialty.

How is sequestration calculated? ›

Start with the Medicare-approved amount for the specific service provided. This is the amount Medicare has determined appropriate reimbursem*nt before any reductions or coinsurance are applied. The current sequestration rate is 2%. Multiply the Medicare-approved amount by the sequestration percentage (as a decimal).

Beginning in January 2024, CMS' RDS Center will implement an update to the sequestration policy, whereby the mandatory two percent (2%) payment reduction will be applied at each interim payment request rather than applying the reduction only to the final payment.

Additional legislation suspended the application of the BCA mandatory sequester to Medicare during the Coronavirus Disease 2019 (COVID-19) pandemic from May 2020 through March 2022 and limited the reductions to 1% from April 2022 through June 2022. (See “Temporary Suspension of Medicare Sequestration.”)

But older folks would lose big; after all, their work and savings decisions had long assumed they could rely on Medicare as they aged. They would have to sell their assets and spend their savings to finance their health care, and their consumption levels would drop.

The standard monthly premium for Medicare Part B enrollees will be $174.70 for 2024, an increase of $9.80 from $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries will be $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023.