Sequestration General Information
President Barack Obama’s sequestration order of March 1, 2013, requires a mandatory 2-percent reduction to Medicare payments effective April 1, 2013, according to the Centers for Medicare & Medicaid Services (CMS). HMSA is reducing Part A and Part B service payments to providers for all Medicare Advantage and plans and BlueCard Host Medicare Advantage claims by 2 percent. The reductions will affect:
- Physician and facility claims with service and discharge dates on or after April 1, 2013.
- Durable medical equipment (DME) claims with service and discharge dates for rental equipment or multi-day supplies on or after April 1, 2013.
HMSA Payment Due to Sequestration
The CMS Physician Fee Schedule is not changing as a result of the sequestration order. Only provider payments are affected by the 2% payment reduction. Accordingly, Medicare Advantage and BlueCard Host Medicare Advantage member copays, coinsurance and deductible amounts are not impacted and they are not responsible for the 2-percent payment reduction. See payment example below:
| Medicare Eligible Charge | Member Copayment | HMSA Payment Amount Before 2% Reduction | HMSA Payment After 2% Reduction |
|---|---|---|---|
| $100.00 | $15.00 | $85.00 | $83.30 |
Medicare Crossover Claims Processing
| Provider Medicare Assignment Status | Member Coverage | 2% Reduction Liability |
|---|---|---|
| Assigned | Medicare Primary, HMSA Commercial Plan Secondary | HMSA and member are not responsible for the 2% provider payment reduction to Medicare claim |
| Assigned | Medicare Advantage primary, HMSA Commercial Plan secondary | HMSA and member are not responsible for the 2% provider payment reduction to Medicare Advantage or claim |
| Unassigned | Medicare Primary, HMSA Commercial Plan Secondary | HMSA commercial plan will pay for the 2% provider payment reduction to Medicare claim |
| Unassigned | Medicare Advantage or primary, HMSA Commercial Plan secondary | HMSA commercial plan will pay for the 2% provider payment reduction to Medicare Advantage or claim |
The eligible charge for claims from providers who accept Medicare assignment will be reported on the RTP as the Medicare Eligible Charge minus the 2 percent payment reduction amount from the primary claim.
Medicare Advantage and Provider Reporting
For assigned Medicare provider claims for Medicare Advantage and members we will use the following Report to Provider (RTP) message to reflect the 2% provider payment reduction: “HMSA’s payment has been reduced by 2% due to sequestration. The member is not liable for this amount.” will be the message used on the Report to Provider (RTP) to indicate the mandatory 2% provider payment reduction was applied to a claim service line.
For unassigned Medicare provider claims for Medicare Advantage members we will use the following Report to Provider (RTP) message to reflect the 2% provider payment reduction: “HMSA’s payment has been reduced by 2% due to sequestration. Unassigned Medicare providers may bill the member for this amount. Providers should discuss the financial impact of this amount with Medicare Advantage members.”
Message Code 253 will be used to indicate the 2% provider payment reduction was applied to a service line.
Sequestration was suspended due to Public Health Emergency COVID-19 effective for date of service 5/1/2020 to 3/31/2022.
- It resumed for physician and facility claims with service and discharge dates on or after April 1, 2022 - June 30, 2022 with 1% payment adjustment. The 2% adjustment began on July 1, 2022.
- Durable medical equipment (DME) claims with service and discharge dates for rental equipment or multi-day supplies on or after April 1, 2022, resumed with 1% payment adjustment. The 2% adjustment began on July 1, 2022.
Revision History
| Date | Nature of Revision |
|---|---|
| 08/03/2026 | Migrated to new platform. |