Sequestration in medical billing is a critical concept that often flies under the radar, yet it significantly impacts Medicare Fee-for-Service (FFS) claims payments. This procedure, involving automatic spending reductions, is used to enforce budget policy goals, particularly when agreed-upon spending caps are not met [[2], [3]. Understanding sequestration in medical billing is essential for physicians, patients, and stakeholders alike to navigate the intricacies of medical payments.
Sequestration in Medical Billing: The Basics
What is Sequestration?
Sequestration refers to automatic spending reductions that cancel budgetary resources to enforce budget policy goals [[3](https://www.acponline.org/practice-resources/business-resources/payment/medicare-payment-and-regulations-resources/physician-claims-under-the-sequestration-rules-for-medicare)]. It was authorized by the Balanced Budget and Emergency Deficit Control Act of 1985, later applied through the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012 [[3]. Sequestration can mean various things depending on the context, but in the world of medical billing, it refers to specific reductions in federal payment applied to Medicare claims [[2]
Sequestration in Medical Billing: Its Impact
How Does Sequestration Affect Medical Billing?
Sequestration significantly affects Medicare reimbursement to beneficiaries. A typical manifestation of sequestration is the 2% payment adjustment applied to Medicare FFS claims, which took effect on April 1, 2013 [[2], [3]. This means that providers receiving payments directly from Medicare saw a 2% reduction in their payments, resulting in payments like $39.20 instead of $40.00 [[2], [3]
Sequestration in Medical Billing: Suspension and Adjustments
How Has Sequestration Been Altered Over Time?
The 2% sequestration payment adjustment to Medicare FFS claims saw a suspension period from May 1 to December 31, 2020, instated by the CARES Act. This suspension was further extended to December 31, 2021, due to the Consolidated Appropriations Act, 2021, and the Act to Prevent Across-the-Board Direct Spending Cuts [[1], [2]
From 2022 onwards, the payment adjustments began to shift. Until March 31, 2022, no payment adjustment was implemented. A 1% payment adjustment took place from April 1 to June 30, 2022, and starting from July 1, 2022, a 2% payment adjustment was reinstated [[1]
Frequently Asked Questions
1. What is the role of sequestration in medical billing?
Sequestration involves automatic spending reductions in medical billing that enforce budget policy goals. It is particularly applied when agreed-upon spending caps are not met.
2. How does sequestration affect healthcare providers?
Sequestration significantly impacts healthcare providers, mainly through a 2% payment reduction in Medicare Fee-for-Service claims payments. This means that healthcare providers receive slightly less than the original payment amount.
3. Have there been any recent changes to sequestration in medical billing?
Yes, the 2% sequestration payment adjustment was suspended from May 1 to December 31, 2020, and further extended to December 31, 2021. From 2022 onwards, the payment adjustments began to shift, with a 2% payment adjustment reinstated from July 1, 2022.
FAQ:
1. What is the role of sequestration in medical billing?
2. How does sequestration affect healthcare providers?
3. Have there been any recent changes to sequestration in medical billing?
4. What is sequestration in the context of medical billing?
5. When did sequestration in medical billing take effect?
6. How is sequestration calculated in medical billing?
7. What are the implications of sequestration in medical billing?
8. What legislation authorized sequestration in medical billing?
9. Are there ongoing discussions or potential future changes to sequestration in medical billing?
10. Where can I find more information about sequestration in medical billing?
Conclusion
The intricacies of sequestration in medical billing underscore the complex nature of healthcare payment systems. Understanding these complexities can assist healthcare providers, patients, and stakeholders in navigating Medicare payments. Given the ongoing changes and adjustments to sequestration measures, staying informed of these updates is crucial for anyone involved in medical billing.
References:
[[1] 2% Payment Adjustment (Sequestration) Begins July 1, 2022 (cgsmedicare.com)
[2]How Is Sequestration Calculated In Medical Billing? - MedMG
[3]Physician Claims Under the Sequestration Rules for Medicare | ACP Online