CMS News Regarding Mandatory Reductions to MPFS through Sequestration
As mandated by prior federal legislation, mandatory cuts in federal spending were enacted through sequestration on March 1, 2013. The sequestration cuts will impact the Medicare fee for service fee schedule, effective for claims with dates of service of April 1, 2013 and later. Cahaba GBA has posted the notification below communication that the sequestration cuts will include a 2% reduction to the Medicare fee for service schedule (Parts A and B).
There has been conversation about how the 2% reduction would be applied. Based on our understanding, the reduction will be applied after any member cost-sharing (co-pay or deductible) has been applied. For example, if Medicare traditionally allows $100 for a service, the following will occur:
Claims with DOS of March 31, 2013 or earlier:
Allowable: $100.00
Deductible: $20.00
Payment by Medicare: $80.00
Claims with DOS of April 1, 2013 and later:
Allowable: $100.00
Deductible: $20.00
Payment by Medicare (taking the 2% reduction): $78.40