Medicare & Budget Sequestration: What You Need to Know

Medicare is a vital program for many Americans, but it’s also one that’s been in the news a lot lately because of budget sequestration. Here’s what you need to know about how Medicare is being affected by the sequester.

Medicare & Budget Sequestration

Medicare and the federal budget are in the news lately, as Congress wrestles with how to handle looming sequestration cuts.

What does this mean for you? Medicare is facing $716 billion in cuts over the next 10 years, while the overall federal budget faces across-the-board cuts of $1.2 trillion.

What Does Sequestration Mean in Insurance?

Sequestration is a term used to describe an automatic reduction of spending by the Federal Government to meet budget goals. In this case, it’s reducing the amount Medicare will pay to providers by 2%. This should not impact Medicare beneficiaries receiving healthcare from participating providers.

What is Under Medicare Sequestration?

Medicare Sequestration will affect all payments to providers and services that accept Medicare. This applies to doctors, hospitals, home health care, prescriptions, and durable medical equipment. Durable medical equipment will only be affected on equipment issued after April 1st, 2013.

How Much is Medicare Sequestration?

Medicare Sequestration is a 2% reduction in all Medicare-related claims across the board. Anyone that files a claim, and receives payments from Medicare will be affected. This not only includes healthcare providers and services but also Medicare Part C and Part D plan sponsors. The sequestration will work a little differently for Medicare Advantage and Medicare Drug plan programs.

What is Medicare Advantage Sequestration?

Medicare Advantage claims work differently than Traditional Medicare. Instead of claims being submitted to Medicare, the claims are submitted to the Medicare Advantage plan. The plan then pays the claim instead of Medicare.

Medicare Advantage Plans receive payments from Medicare based on how many beneficiaries they have enrolled and use this money to pay the medicare related claims. These payments received by the plans are also subject to the sequestration of 2%. Essentially the Medicare Advantage funding is lowered by 2% by the sequestration.

How Long Does Medicare Sequestration Last?

Medicare sequestration was suspended until December 2021 due to COVID-19 but has since been activated. This adjustment doesn’t have a scheduled end date and is an indefinite rule. This 2% reduction applies to all Medicare claim payments.

How is Sequestration Calculated?

Below we’ll show some examples of how sequestration is calculated.

Participating providers accepting Medicare assignment example

A participating provider will bill for a service that has a Medicare-approved amount of $100 and $50 of that is applied to the deductible.

That leaves a balance of $50. Prior to sequestration, Medicare would pay 80% of the Medicare-approved amount after the deductible, which in this case would be $40 ($50 x 80% = $40).

The beneficiary would be responsible for the remaining 20% coinsurance which would equal $10 ($50 – $40 = $10). Once you apply the sequestration reduction of 2% Medicare would make a payment of $39.20 instead of $40 ($40 x 2% = $0.80).

Non-participating providers that accept Medicare payments

A non-participating provider bills a claim with a limiting charge of $109.25. The beneficiary is responsible to pay the provider this full amount.

The sequestration affects the amount Medicare will reimburse the beneficiary. The non-participating amount approved by Medicare is $95 and $50 is applied to the deductible.

The balance of $45 is left over. Medicare usually will reimburse the beneficiary 80% after the deductible is met. This would be $36. ($45 x 80% = $36).

Because of the 2% sequestration reduction, the $36 payment would be reduced by 2%. This would result in the payment amount being $35.28 instead of $36 ($36 x 2% = $0.72).

Is the 2% Medicare Sequestration Still in Effect?

Yes! There was a temporary suspension of the sequestration until December of 2021. Congress announced an agreement to provide relief from the 2% Medicare sequester cut for both participating providers and non-participating providers starting January 1, 2022, and ending March 2022. Starting April 2022 through June 2022 a 1% sequester will be in effect. Effective July 2022 full 2% cut will resume.

Do These 2% Sequestrations Apply for Medicare Advantage?

Since Medicare Advantage works under the Medicare systems and rules they will be subject to sequestration as well. Medicare Advantage plans negotiate rates with their providers. Since the process is slightly different the sequestration directly applies to the payment the Medicare Advantage program receives from Medicare per beneficiary. Their payments per beneficiary will be reduced by 2%.

FAQs

Are drugs excluded from the Medicare Sequestrations?

No! All Medicare claims are affected by the 2%reduction. There are no exemptions provided for Medicare services.

Will beneficiaries have to pay more because of the Medicare Sequestration?

Most Medicare beneficiaries won’t be affected by the sequestration. If your healthcare providers accept Medicare you’ll see no impact on what you pay. If you use healthcare providers that don’t accept the Medicare assigned amount, you could see a small decrease in what you’re reimbursed by Medicare.

Medicare & Budget Sequestration Conclusion

In conclusion, this change should not affect most Medicare beneficiaries. The only ones affected would be those that use Medicare providers that don’t accept the Medicare assignment. The vast majority of healthcare providers accept the assignment. You can easily check with your provider to see if they accept it. Simply, ask them directly, work with a licensed insurance agent to verify, or use the doctor finder tool on Medicare’s website.

The post Medicare & Budget Sequestration: What You Need to Know appeared first on Medigap.com.

from Medigap.com https://www.medigap.com/news/medicare-budget-sequestration/
via IFTTT