Medicare 2% Payment Cut Suspended Through 2021


President Joseph Biden this week extended the suspension of the Medicare sequestration, the federal government’s 2% across-the-board payment cut, through the end of the year.

The pause, which was put in place because of the COVID-19 pandemic, had expired March 31. However, lawmakers did not approve the extension until this month.

The Centers for Medicare & Medicaid Services (CMS) had instructed 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," CMS said. "MACs will automatically reprocess any claims paid with the reduction applied if necessary."

The sequestration, which was signed into law in August 2011, applies a 2% cut to all claims after coinsurance, deductible, and Medicare secondary payment adjustments.

The original suspension was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which became law last year. It was extended as part of an omnibus spending package that was signed into law Dec. 27.

Last Updated On

April 15, 2021

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