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BILLING AND COLLECTIONS

Sequestration: another 2% cut on doctors’ payments

Sequestration. It began March 1, 2013. And it is hitting doctors’ payments by 2%.

As to what managers need to do to meet the payment reductions, the financial experts are all advising essentially the same things: get the copays and deductibles up front, and set up a credit-card-on-file for as many patients as possible.

The sequester specifics are these:

  • The 2% cut applies to all claims with a date of service of April 1, 2013 and afterwards.
  • It also applies to the cost of physician-administered drugs.
  • And it applies to any Medicare EHR incentive payments made April 1, 2013 and afterwards. However, the sequestration does not apply to Medicaid, so offices that are participating in a state HER program will not see a reduction in their incentive payments.
  • Copayments and deductibles have not changed. Only doctors’ payments are cut. And it’s the payment itself, not the allowed charge, that gets the hit.

So if the total payment for a service is $100 and the office’s payment is normally $80, that $80 is reduced by 2% to $78.40, but the office still collects the full $20 from the patient

  • Medicare’s payments to patients for unassigned claims have been cut by 2%, and Medicare recommends that offices that don’t take assignment notify their patients of this reduction.
  • Durable medical equipment, graduate medical education, and ambulatory surgery center payments have also been cut by 2%
  • Other federal health care spending has been cut by more than 5% this year and will see deeper cuts in the future. That includes programs of the National Institutes of Health, the Centers for Disease Control and Prevention, and the Substance Abuse and Mental Health Services Administration.

Sequestration until 2021?

Sequestration is a procedure that puts a cap on the federal budget by bringing in across-the-board spending reductions.

The Budget Control Act of 2011 called for sequestration if Congress did not pass deficit reduction legislation. The sequestration was originally set to take place January 1, but the American Taxpayer Relief Act of 2012 delayed it until March 1, 2013

The current cuts will continue until 2021 unless Congress agrees on a new budget that addresses federal spending and the deficit.

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