AANEM News Express

AANEM News Express

Mandatory Cuts to Medicare Begin

4/2/2013
 
Mandatory Cuts to MedicareAs of April 1, Congress has not taken action to delay the mandatory sequestration cuts to Medicare payments. Therefore, any Medicare claims with a date of service on or after April 1 will incur the 2% reduction. However, published fee schedules, claim pricers, etc., will not reflect the mandatory 2% cut. 

Claims adjustment reason code 223 will be used to report the sequestration reduction on electronic remittance advice or standard paper remittance. The reduction is taken from the calculated payment amount, after the approved amount is determined and deductibles and coinsurance are applied.

For example:

A Medicare participating provider bills a service with an approved amount of $100, and $50 is applied to the deductible. A balance of $50 remains.

Medicare normally would pay 80% of the approved amount after the deductible is met, which is $40 ($50 x 80% = $40). However, due to the sequestration reduction, 2% of the $40 is not paid, resulting in a payment of $39.20 instead of $40 ($40 x 2% = $0.80).

The patient is responsible for the deductible ($50) and a 20% coinsurance amount of $10 ($50 - $40 = $10).

The provider cannot recoup the 2% sequestration cut.

Unless Congress takes action to change the current law, Medicare reimbursement will be subjected to a 2% decrease at least through September of 2013. The future of sequestration is dependent on whether Congress can reach a new budget agreement to address deficit and spending concerns. Without action, the cut will remain in effect until 2022. 

The AANEM will continue to monitor Medicare reimbursement. If you have questions, please contact the AANEM Policy Department at policy@aanem.org.

 


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