AANEM News Express

AANEM News Express

Sequestration Cuts Medicare Reimbursement Beginning April 1

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. AANEM members are 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.
AANEM staff is tracking implementation of the sequestration cuts and will provide updates as they become available.

Make Your Voice Heard: Contact Your Representative Today

Use the talking points below when contacting your federal legislators by phone, email, or mail. Identify contact information for your representatives. You may also schedule an appointment to meet with legislative staff face-to-face at your representative’s local office.

Thank you for partnering with us in this work. Your efforts help protect the future of health care for Medicare patients.

Talking Points: Sequestration and Medicare

Sequestration to Reduce Reimbursement for Medicare Claims
Effective April 1, Medicare will begin reimbursing claims at 98 cents on the dollar (a 2% reduction).

Sequestration to Impact Funding for National Institute of Health
  • Cuts will slow down progress on vital medical research projects.
  • New grants that otherwise would have been funded, will not be awarded.
  • Projects that can't be put on hold while researchers seek additional money may be scrapped.
Sequestration to Impact Medical Schools and Teaching Hospitals 
  • Training for the next generation of physicians will be limited by these cuts.
  • Fewer underserved and uninsured will receive care because hospitals may not have the staff to provide care to this population.
  • Services often unavailable elsewhere in communities, including access to trauma centers, will be limited due to cuts to staffing in these larger institutions.
Sequestration Impacts Affordable Care Act
Key parts of the Affordable Care Act are exempt from sequestration, notably funding to subsidize insurance for eligible people and the Medicaid expansion. However, other administrative aspects, including set-up funds, education about the program, and the help necessary to enroll people, will be impacted.

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