CMS temporarily held certain Medicare claims in April 2021 while Congress considered legislation to extend the suspension of the 2% Medicare sequestration reduction.
According to the March 30, 2021, MLN Connects newsletter, CMS instructed Medicare Administrative Contractors (MACs) to hold claims with dates of service beginning April 1, 2021. The temporary hold aimed to reduce the number of claims that MACs would need to reprocess if Congress extended the suspension.
CMS also stated that MACs would automatically reprocess claims if the 2% reduction had already been applied and later needed correction.
Senate Passes Bill to Extend Medicare Sequester Suspension
The Senate passed legislation by a 90-2 vote to suspend the 2% Medicare sequestration reduction through the end of 2021.
Senators Jeanne Shaheen and Susan Collins introduced the legislation. The proposal would eliminate the 2% Medicare reduction for the remainder of 2021 and increase sequestration reductions in fiscal year 2030 to offset the cost.
The House was expected to consider the legislation after members returned from the congressional recess.
The sponsors estimated that the legislation could prevent approximately $12.3 billion in Medicare reimbursement cuts over nine months.
AMA Supports Extending the Suspension
The American Medical Association (AMA) supported the Senate’s action.
AMA President Susan R. Bailey, MD, said physician practices were already facing financial pressure during the pandemic. She argued that reinstating the 2% Medicare reduction could add further pressure to medical practices.
The AMA called for the House to approve legislation extending the suspension.
AHA Calls for Continued Support
The American Hospital Association (AHA) also supported the Senate’s action.
AHA President and CEO Rick Pollack highlighted the financial and operational challenges facing hospitals and health systems during the pandemic.
The organization called for additional support for healthcare providers. Its requests included more funding for the Provider Relief Fund, assistance for hospitals with Medicare accelerated payments, and congressional action related to Medicare cuts.
Why CMS Held Medicare Claims
Congress had temporarily suspended Medicare sequestration during the COVID-19 pandemic.
The suspension aimed to provide financial support to healthcare providers facing lower patient volumes and reduced revenue. The temporary suspension was scheduled to expire on April 1, 2021. Healthcare organizations and industry groups urged Congress to extend the suspension because providers continued to face pandemic-related financial challenges.
What Is Medicare Sequestration?
Medicare sequestration reduces Medicare payments to providers and other healthcare entities.
The policy began in 2013 as part of federal efforts to control Medicare spending growth.
The payment reduction can affect healthcare providers because it reduces the amount they receive from Medicare for covered services.
The COVID-19 pandemic increased concerns about the financial impact of reinstating the reduction while healthcare organizations continued to manage pandemic-related challenges.
Medicare Spending Continues to Grow
Medicare spending had increased significantly before the pandemic. CMS actuaries reported that average annual Medicare spending growth reached 7.6% in 2019. That rate exceeded reported growth in Medicaid and commercial payer spending. Medicare enrollment was also expected to increase. Rising enrollment could contribute to continued growth in overall Medicare spending.
What the Claims Hold Meant for Providers
The temporary claims hold was designed to limit administrative work for Medicare Administrative Contractors. Without the hold, MACs could have processed claims with the 2% reduction and later needed to reprocess those claims if Congress extended the suspension.
By temporarily holding eligible claims, CMS sought to reduce unnecessary claim adjustments. For healthcare providers, the policy also highlighted the importance of monitoring federal Medicare payment changes. Changes to sequestration can affect reimbursement, cash flow, and revenue cycle planning.
Conclusion
CMS temporarily held certain Medicare claims in anticipation of congressional action on the 2% Medicare sequestration suspension.
The measure aimed to reduce claim reprocessing if Congress extended the payment reduction suspension. Healthcare organizations continued to monitor the legislation because Medicare payment changes could affect reimbursement and financial planning.