2013 Medicare sequester update

According to a memo circulated by the Centers for Medicare and Medicaid Services (CMS) on March 8, the 2 percent across-the-board Medicare provider payment cut mandated by the sequester order will begin on April 1, 2013.  Key points made in the memo include the following:

• The 2 percent physician payment cuts applies to all Medicare fee-for-service with dates of service on or after April 1, 2013.
• The same payment reductions affects other providers with April 1 (or later) dates-of-discharge, dates of service, start date of DME equipment rental, and start date of rental equipment or multi-day supplies.
• The reduction will be applied to claims payments, after beneficiary coinsurance, deductibles, and any applicable Medicare Secondary Payment adjustments are made.  Allowed charge amounts are not affected.
• Although beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction, Medicare payments made to beneficiaries for unassigned claims will be subject to the 2 percent payment cut.

See examples of how the cuts may affect payments.

Additional details on implementation of the sequester will be provided as soon as they are available.

The failed Medicare physician payment formula known as the Sustainable Growth Rate or SGR must be eliminated now and replaced with policies that promote both better quality and lower costs in Medicare. The AMA has called on Congress again and again to stop the broken cycle of scheduled cuts and short-term patches that impede the development and adoption of new ways to deliver and pay for high quality patient care.

The most fiscally responsible action Congress can take for Medicare is permanently repealing the SGR. This year, the Congressional Budget Office has sharply reduced its cost estimate for preventing SGR pay cuts over the next decade, lowering a major barrier to accomplishing the elimination of this formula once and for all. To put the new CBO estimate of $138 billion in perspective, consider that Congress has already spent $146 billion on short-term, destabilizing patches to the SGR. It is clear – the time to repeal the SGR and move to a model that works is now.

Permanently repealing the SGR is a vital step to preserve access to care for 49 million seniors with Medicare coverage and 10 million military members and families with TRICARE coverage across the nation. To replace the SGR, an array of Medicare delivery and payment models need to be made available that will give physicians the flexibility to voluntarily choose options appropriate to their specialty, community, practice and patients.
 
Resources on this page provide background on the Medicare physician payment formula as well as new payment and delivery models, and describe how Medicare pay cuts due to the SGR affect each state.

Contact your U.S. representative and senators today;  send them an email and call their offices through our grassroots hotline at (800) 833-6354. Your patients can help, too, by contacting Congress through the AMA’s Patients’ Action Network.