Sequestration: Have you Felt the Effects?

What does sequestration mean for you and your practice? Most significantly, this means a 2% reduction in Medicare reimbursement for all services provided on or after April 1, 2013. This means that instead of Medicare payment at 80% of the allowed amount, they pay at 78% of the allowed amount. The patient is still responsible for 20%, and the provider of service has to adjust the 2%.

What Does This Look Like?

Prior to
Sequestration
After
Sequestration
Allowed Amount $161.61 $161.61
Medicare Payment $129.29 $126.70
Patient Payment $32.32 $32.32
Provider Paid $161.61 $159.02

 

The difference of $2.59 is not reimbursable by supplemental insurance, and the patient may not be billed for it. This is a “contractual obligation” and is shown on your Remittance Advices from Medicare with adjustment code “CO-223.”

What Does this Mean?

Declining revenue for Medicare providers will affect not only the provider, but their employees and patients as well. Reduction in Medicare fee schedule has become standard, however the additional 2% reduction on top of the usual reductions will become unsustainable for many providers.

The American Medical Association is projecting a loss of up to 766,000 jobs in the healthcare industry due to sequestration, (source: AMA: Sequestration Cuts Cause Real Pain for Medicare Patients, Physicians) and there is no near end in sight to the 2% fee schedule reduction.  Due to the further decline in fee schedule, it is more important than ever to ensure each claim is billed accurately for the highest reimbursement allowable, to keep on top of Accounts Receivable, and to keep communication open with patients on any out-of-pocket expenses.

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