If you’ve noticed a change in your Medicare reimbursements over the last month, you’re not alone. As of July 1, 2022, the sequestration rate, which was previously 1%, rose back up to 2%, the rate that was in effect prior to the public health emergency.
These sequestration cuts had been suspended by the Protecting Medicare and American Farmers from Sequester Cuts Act which was originally passed in 2020 to provide relief from the Covid-19 crisis. But don’t get too comfortable. Medicare reimbursement rates won’t stay at 2% for long. Here are some important dates and facts to know about the Medicare sequestration cuts and how they will impact your business.
What Exactly is Happening with the Changes in Medicare Reimbursement?
Sequestration has been a tool to enforce budgets for the CMS since 2013. These cuts are applied, after coinsurance, deductibles, and adjustments, to all claims. Previously frozen, sequestration cuts resumed with a 1% increase in April, and they are now up to 2% for the remainder of 2022. This means you can expect a 1% reduction in Medicare payments.
Beneficiaries, however, will see few direct impacts as the benefit structure remains unchanged. This -2% cut will remain until the fiscal year 2030, when it increases to -2.25% for the first six months and then finally to -3% for the remainder of the year.
How Will the Medicare Sequestration Cuts Affect Me?
Across the board, you will see a 2% reduction in the amount of your Medicare reimbursements. This seems like a minor number, but it can be a significant loss of revenue once you factor in the number of claims affected. And, you will need to be prepared for even further cuts in 2030. How will a 3% reduction in your income affect your bottom line?
It’s important to have a handle on how much of your revenue comes from Medicare payments.
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What Can I Do About These Changes?
With the right planning, these Medicare sequestration cuts won’t dramatically change your income. Look at other areas in your business where you can possibly save money. What are your overhead costs? Would outsourcing your billing and coding help? Do you need to streamline your office procedures to be able to see more patients?
MBM can help you sort through the options to find the right plan for your business and meet the Medicare sequestration cuts fully prepared.