Physicians will begin to see their Medicare payments cut by 2% for services rendered beginning April 1st as the federal budget sequester takes effect. Their patients will still be responsible for co-insurance and deductibles at the same, pre-sequester level. For unassigned claims, reimbursements to beneficiaries would be subject to the 2% sequester reduction just like payments to physicians on assigned claims.

A procedure that today generates $100.00 for a practice participating in Medicare will bring in only $98.40 under sequestration. Medicare’s payment to the practice will be reduced by 2%, from $80.00 to $78.40 while the patient will continue to be responsible for the full $20.00 co-insurance. 

CMS has acknowledged that incentive payments under the Medicare Meaningful Use Program will also be subject to the 2% reduction after April 1st. This reduction will amount to a few hundred dollars at most this year for physicians and other eligible professionals but could cost hospitals in the thousands.  The Medicare payment cuts are part of an $85 billion federal budget sequester for the fiscal year ending September 30th that has resulted from the failure of Congress  to act on reduction of the $1.2 trillion federal deficit.  Medicaid and the Medicaid Meaningful Use Program are not impacted.