Sequestration May Affect Medicare Contract Provider Payments

Since April 1, 2013, payments made by the Center for Medicare & Medicaid Services (“CMS”) to Medicare Advantage Organizations (“MAO”), Medicare Part D, and other managed Medicare payment programs have been reduced by 2% in accordance with the sequestration order of the Balanced Budget and Emergency Deficit Control Act of 2011. Because the sequestration reductions are only effective for dates of discharge or dates or services provided on or after April 1, 2013, hospitals and other contract providers may just now be realizing the effects of such reduction, as third-party payers such as insurance companies make efforts to pass the reductions on to contract providers.

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