CMS Releases Sequestration Details; Medicare EHR Incentive Payments Subject to Two-Percent Reduction


On March 8, 2013, CMS announced that it will apply the two-percent sequestration reduction to all Medicare provider payments with dates of service/discharge on or after April 1, 2013.  The announcement also states that claims for durable medical equipment, including claims under the DME Competitive Bidding Program, “will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.”  As we predicted in prior editions of Health Headlines, CMS confirmed that the payment reduction will apply only to the Medicare payment amount after accounting for beneficiary cost-sharing and Medicare Secondary Payor amounts. The CMS announcement is available here

CMS also issued a statement confirming that the agency will apply the two-percent reduction to Medicare EHR Incentive payments.  The reduction will begin with incentive payments made on or after April 1, even for providers and physicians who attested to Meaningful Use before April 1.  While other publications had predicted that Medicare EHR Incentive payments would not be subject to sequestration, our interpretation of prior OMB guidance (as discussed in the March 4, 2013 edition of Health Headlines) left open the possibility that the payments would be subject to reductions.  Like Medicaid provider payments, Medicaid EHR Incentive payments are exempt.  CMS’s announcement is available here.

King & Spalding continues to monitor these developments and will publish updates as they become available.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253,

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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