Medicare payments to decrease starting July 1

Medicare payments for dates of service on or after July 1 will decrease as full “sequestration” cuts take effect after several months of partial cuts. “Sequestration” refers to across-the-board reductions in certain federal spending mandated by The Budget Control Act of 2011.

Over the years, Congress has intervened to suspend or mitigate Medicare’s sequestration payment reductions. For example, The American Taxpayer Relief Act of 2012 postponed the initial sequestration cut, a 2% decrease that took effect April 1, 2013. Most recently, the COVID-19 public health emergency (PHE), spurred Congress and the president to enact the Protecting Medicare and American Farmers from Sequester Cuts Act in December 2021. That suspended sequestration through March 31, 2022, then permitted a 1% decrease for services rendered from April 1 through June 30.

Sequestration cuts will now revert to 2% — the rate in effect prior to the PHE — for services rendered on or after July 1. Sequestration does not affect Medicare allowances nor the corresponding beneficiary cost-sharing. The 2% reduction only applies to what Medicare pays you, the billing clinician.

The sequestration decrease will appear on Medicare remittance advices with claim adjustment code CO 253, "Sequestration – reduction in federal payment," as the reason.

— Kent Moore, senior strategist for physician payment, American Academy of Family Physicians

Posted on June 20, 2022, by Kent Moore