To help customers stay up to date on this evolving situation, we are sharing our recent communications about the status of Medicare sequester relief.
Please check back as new developments are expected to occur over the next few weeks.
Update from April 1, 2021
On March 30, the Centers for Medicare & Medicaid Services (CMS) announced via special Medicare Learning Network update it will hold Medicare claims after April 1 so that providers don’t see the 2% Medicare sequestration cuts go into effect before Congress takes final action to further extend the moratorium on those cuts. The brief CMS announcement stated, “In anticipation of possible Congressional action to extend the 2% sequester reduction suspension, we instructed the Medicare Administrative Contractors (MACs) to hold all claims with dates of service on or after April 1, 2021, for a short period without affecting providers’ cash flow.” Further, the announcement noted, “This will minimize the volume of claims the MACs must reprocess if Congress extends the suspension; the MACs will automatically reprocess any claims paid with the reduction applied if necessary.”
As we previously shared, Congress paused the 2% Medicare sequester cuts as part of the CARES Act, but that moratorium was set to sunset at the end of March. On March 25, the Senate overwhelmingly passed legislation extending the moratorium through 2021, but that bill doesn’t include a provision in the House-passed version that would avoid budget rules, triggered by the American Rescue Plan, that would potentially impose additional sequester cuts on Medicare payments to providers if certain spending thresholds are reached. The House must now vote on the Senate version when it returns from recess—the week of April 13—before the bill can be signed by the President.
Update from March 15, 2021
We wanted to provide you with a brief update on legislative activity to extend the Medicare sequester relief that expires on March 31. As you may know, there were efforts to include an extension in the recently enacted American Rescue Plan Act of 2021 (COVID relief bill) that didn’t come to fruition, pushing Congress to act with standalone legislation in order to prevent the cuts from going into effect at the end of the month.
On Friday, March 19, the House of Representatives passed a bill with bipartisan support that would extend sequester relief through the end of the year and includes a provision that would prevent the cost of the American Rescue Plan Act from leading to new sequester cuts (referred to as a PAYGO provision*). The bill now heads over to the Senate where its future is unclear.
Last week, the Senate also introduced a bill to address sequestration; however, the Senate bill takes a different approach by extending sequestration relief through the Public Health Emergency. The Senate bill does not clear the PAYGO provision, and also extends the sequester into 2031, which is where the offset is captured.
The Senate could consider a modified version of the House bill that would possibly garner more Republican support, as the current version is unlikely to pass. Without further action, the sequester will apply again starting April 1. It is possible that – if Congressional action in April appears to be imminent – the Department of Health and Human Services (HHS) could delay the collection of the sequester for a period of time so that healthcare providers would be relieved of paying the sequester while awaiting further action from Congress. We will keep you updated as these efforts play out on Capitol Hill.
*Statutory PAYGO requires an across-the-board sequester of non-exempt mandatory spending programs, including the Medicare program, if lawmakers enact net deficit-increasing legislation over the course of the year. When legislation is enacted that affects mandatory spending or revenues, like the American Rescue Plan Act of 2021, the Office of Management and Budget (OMB) records the budgetary effect of the law. In such cases, OMB divides the ten-year effect and puts that amount on the PAYGO scorecard for each of the ten years. If Congress adjourns for the year with deficit increases still on the PAYGO scorecard, OMB issues an offsetting sequester of non-exempt mandatory programs. Under this scenario, the Medicare sequester could increase to as much as 4% in 2022, in absence of legislation to satisfy the PAYGO Scorecard.