From the American Academy of Ophthalmology

Medicare Reimbursement Cut Hits Today as Result of Sequestration

Beginning today, Medicare physician claims submitted for reimbursement will be reduced by 2 percent as part of across-the-board cuts in federal agency spending caused by the sequestration process. Costs for drugs administered by the physician that are included in those claims are also subject to the 2 percent cut.

The following example has been revised to clarify the impact of sequestration on physician Medicare payment.

Beneficiary copayments and deductibles do not change as a result of sequestration. The cut is imposed only on the 80 percent portion of the allowed charge for a service that a participating physician receives directly from Medicare. For example, if the Medicare allowed charge is $100 for a service before sequestration, Medicare would technically allow $98 for the same service after sequestration. Therefore, the physician would be paid $78.40 by Medicare (98 percent of $80) and $20 by the beneficiary (20 percent of $100).

The sequestration cut also applies to incentive payments that physicians receive for their participation in the Medicare Electronic Health Record Incentive Program and to ambulatory surgery center reimbursement.

For unassigned claims for services provided by physicians who do not participate in the Medicare program, the 2 percent cut will be applied to the Medicare payment made to the beneficiary. The physician’s patient billing does not change.

Sequestration cuts are scheduled to last for nine years, through 2021.

For more information, contact the Academy’s Governmental Affairs Division at 202.737.6662.