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March 21, 2013

Mandatory Payment Reductions in the Medicare Fee-for-Service (FFS) Program: Sequestration

As required by law, President Obama issued a sequestration order on March 1, 2013 requiring across-the-board reductions in Federal spending.

In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a two percent reduction in Medicare payments. Therefore, to prevent making overpayments, interim and pass-through payments related to the Medicare cost report will be reduced by two percent. Beginning April 1, 2013 the two percent reduction will be applied to Periodic Interim Payments (PIP), Critical Access Hospital (CAH) and Cancer Hospital interim payments, and pass-through payments for Graduate Medical Education, Organ Acquisition, and Medicare Bad Debts.

Questions about reimbursement should be directed to the provider contact centers.

TDL 13271


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