Sequester Goes Into Effect—Implications for Neurologists

March 1, 2013


March 1, 2013 Update

The automatic across-the-board spending cuts, known as sequestration, resulting from the Budget Control Act of 2011 have now officially gone into effect. Congress was unable to reach a deal to prevent these cuts from happening. This means that beginning on April 1, physicians, hospitals and other providers will receive a 2-percent reduction in payments from Medicare.

In other words, you will be reimbursed at 98 cents on the dollar for your services to Medicare beneficiaries. Cuts to other federal agencies and programs will also begin over the next several weeks. The implementation of sequestration will be very complicated. The AAN will keep you appraised of specific details as we learn them.


The sequestration is not limited to Medicare. The Medicare cut is part of broader cuts, including automatic spending cuts to national defense and biomedical research, to eliminate a total of $1.2 trillion from the federal budget over the next decade.

The AAN, in collaboration with AMA and other professional medical organizations, sent letters to Congress warning about the impact of automatic cuts on research and physician workforce and urging Congress to prevent these cuts from going into effect. 

The automatic cuts originally were scheduled to hit January 1 but were delayed for a couple of months.

Prepare Your Practice

You should prepare your practice for lower reimbursement for services provided to Medicare beneficiaries (the Medicaid program is exempt from the automatic cuts). CMS has yet to determine how it will impose the 2-percent reduction for physicians and how it will retroactively assess the reduction for services provided after March 1. It is unlikely that they will withhold all payments until the agency has determined how the reduction will be imposed.

The Medicare program will undergo this 2-percent across-the-board cut to all providers, including physicians and hospitals. The 2-percent cut is scheduled to be implemented every year until 2021; however, many practical details remain unknown.

Tactics you could use to mitigate potential losses:

  • Bring additional revenue by using new procedural codes for Transitional Care Management (TCM) services. Remember not to bill a TCM code before 30 calendar days from the date of discharge because the service isn’t completed until 30 days have passed.
  • Make use of physician assistants and nurse practitioners.
  • Properly report for the Physician Quality Reporting System (PQRS) in 2013 to avoid penalties in 2015 and 2016.