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Sequestration and Medicare Advantage Plans


Physical therapists and other health care providers that contract with Medicare Advantage (MA) plans should check their agreements to make sure their payments aren't erroneously being cut by 2% as part of sequestration. The Centers for Medicare and Medicaid Services (CMS) clarified in a May 1 memo to MA organizations and others that sequestration does not mandate a 2% reduction of reimbursement to MA contracted providers. MA plans themselves are subject to the 2% reductions; however, MA plans cannot pass along sequestration cuts to providers unless their contracts with specific providers permit the pass-through. If providers determine that their contracts don't permit these cuts, they should consider challenging the reductions as contrary to their participation and network agreements.

APTA has recently learned that 3 national payers— UnitedHealthcare, Aetna, and Humana—have made announcements related to sequestration reductions for MA plans. UnitedHealthcare announced "Specifically, UnitedHealthcare's Medicare Advantage plans will reduce payments by 2 percent for dates of service or dates of discharge on or after April 1, 2013 to providers whose reimbursements are based upon Medicare reimbursement methodology or rates, including Medicare fee schedules.”

Aetna has sent a letter to providers notifying them of a “sequestration rate adjustment for covered items or services you provide to our MA members on or after August 1, 2013, and will continue for as long as these reductions are applied by CMS."

Humana announced “All non-network providers and network providers who are reimbursed based on the Medicare reimbursement methodology … will have the same sequestration reduction applied in the same manner as CMS.” The announcement does not provide an effective date, but it does provide additional information about identifying these reductions on remittance advices.

APTA is reviewing the CMS memo and payer announcements to develop guidance and resources for members to determine if their practice will be impacted by these payer announcements. The information is being shared now so that members can begin to review their individual contracts with third-party payers to determine and assess the direct impact this may have in their practices. For more information regarding a specific payer's implementation of sequestration, contact your provider representative for that payer. more

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