Frequently Asked Questions about Sequestration

April 4, 2013


The automatic across-the-board spending cuts, known as sequestration, have now officially gone into effect.

Congress was unable to reach a deal to prevent these cuts from happening. This means that you will see a 2% cut in reimbursement for your services to Medicare beneficiaries (the Medicaid program is exempt from the automatic cuts). Congress has the power to retroactively fix the 2% Medicare cut but this is unlikely to happen in the current political climate.

You should prepare your practice for lower reimbursement for services provided to Medicare beneficiaries:

  • Medicare FFS claims with dates–of–service or dates–of–discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment.
  • The 2 percent cut is imposed only on the 80 percent of the allowed charge that a participating physician would receive directly from Medicare.
  • Beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction BUT Medicare's payment to beneficiaries for unassigned claims is subject to the cut.
  • Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date–of–service, or the start date for rental equipment or multi–day supplies, is on or after April 1, 2013.

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.

For more information see AMA's FAQs on the 2013 Sequestration.