h1

AOA Advocacy Group explains how sequestration impacts ODs, Medicare

June 15, 2013

Reductions in Medicare payments to physicians including optometrists are part of the deficit-cutting process because Congress and the President have been unable to agree on offsetting alternative cuts. These cuts are a slice of across-the-board federal budget cuts known as “sequestration,” which took effect March 1, 2013.

The AOA is meeting with congressional leaders to underscore the harmful impact these Medicare cuts are having. ODs are urged to use the AOA Online Legislative Action Center at www.aoa.org to weigh in with their U.S. senators and House members on this important issue.

The AOA consulted with the U.S. Centers for Medicare & Medicaid Services (CMS) to provide background information and basic guidance for ODs with questions about sequestration and Medicare cuts.

When will cuts to Medicare claims begin?

In general, payments for Medicare claims with dates of service on or after April 1, 2013, will be subject to a reduction.

How much will my Medicare reimbursement be reduced?

Payment for Medicare fee-for-service claims with dates of service on or after April 1, 2013, will have a 2 percent reduction applied.

Are any Medicare benefits being cut due to sequestration?

No. The sequester will not impact benefits covered by Medicare.

How long will the sequester cuts be applied?

The Budget Control Act dictates the cuts will last for 10 years. Without knowing what future Congresses may do to repeal or rework the cuts, at this point Medicare is only releasing guidance that this reduction will apply for the remainder of the current year.

Will durable medical equipment (DME) claims be impacted?

Yes. Payments for claims for durable medical equipment (DME), prosthetics, orthotics, and supplies 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.

Will my Physician Quality Reporting System (PQRS) incentive bonus be impacted by the sequester?

The AOA is waiting for additional details regarding how the sequester will impact PQRS incentives.

Are drugs excluded from the 2 percent reduction?

All fee-for-service Medicare claim payments are subject to the 2 percent reduction. There are no exemptions provided in the law for drugs provided under the fee-for-service program.

How does the sequester impact the Electronic Health Record (EHR) incentive programs?

Medicare EHR incentive payments made to optometrists will be reduced by 2 percent. This reduction will be applied to any Medicare EHR incentive payment for a reporting period that ends on or after April 1, 2013. If the final day of the reporting period occurs before April 1, 2013, those incentive payments will not be reduced. For optometrists, generally this means that bonuses for meaningful use in 2012 being paid in the first few months of 2013 would not be cut. Payments for meaningful use in 2013 generally will be cut when those payments are made later this year.

Are Medicaid or the Medicaid EHR incentive payments impacted by the sequester?

Medicaid payments are exempt from sequestration cuts, and Medicaid EHR incentive payments will not be reduced.

Will my Medicare contractor be issuing a new fee schedule now that the sequestration cuts are in effect?

Fee schedules will not be changed due to the sequester. Only the final payment amount will be reduced.

Will there be any indication of sequester payment reductions on my claims remittance?

Yes, claim adjustment reason code CARC 223 will be used to denote the sequestration reduction on the electronic remittance advice (ERA) and the standard paper remittance (SPR). The corresponding language for CARC 223 indicates, “Adjustment code for mandated Federal, State or local law/ regulation that is not already covered by another code and is mandated before a new code can be created.”

What impact will the sequester have on patient’s cost-sharing responsibilities?

Beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction. This means that patients can be responsible, in certain circumstances, for making up the difference.

Will the sequester impact Medicare Advantage plans?

Yes. Medicare Advantage (MA) plans are impacted by the sequester. There are a variety of Medicare Advantage payment arrangements such as fee-for-service and capitated plans. CMS payments to the Medicare Advantage plans will be cut, and the MA plans in turn will pass on those cuts to network and non-network physicians. Members who contract with Medicare Advantage plans should verify with the insurers to determine how sequestration cuts will be implemented. For example, Humana and United Health Care West issued the following notices:

Humana: www.humana.com/providers/whats_new/sequestration_reduction.aspx

UHC: https://www.uhcwest.com/vgn/images/portal/cit_60701/600764474_UHCWest_Sequestration_Comm.pdf

How will claims payments be calculated?

The reduction will be taken from the calculated payment amount, after the approved amount is determined and the deductible and coinsurance are applied. Depending on whether the provider accepts assignment, the payment will be issued differently. Generally, doctors who accept “assignment” (including all participating physicians) would apply the normal deductible and copayment to determine the patient’s share at the time of the service, but will later receive 2 percent less than usual from the government.
Generally, the doctor who does not accept “assignment” will bill the normal amount to the patient at the time of the service, and later the patient will receive 2 percent less than usual from the government.

If the doctor is not certain what amounts to charge to whom, particularly when other payers might be involved, consider submitting the claim and using the Medicare remittance advice as a guide for billing the patient or other payers.

Examples of payment scenarios are included below:

Optometrist who accepts assignment: For an assigned claim, after patient has met his/her deductible, the patient is responsible for 20 percent of payment and Medicare pays the remaining 80 percent. Under sequestration, for a $100 service, the optometrist would collect $20 from the patient and $78.40 ($80 x 0.98) from the federal government for a total of $98.40. (The 2 percent reduction is applied to the amount issued from the federal government to the optometrist.)

Optometrist who does not accept assignment: For an unassigned claim for a $100 service, the optometrist would collect $100 from the patient and the patient would receive $78.40 from the federal government. In other words, with assigned claims, the doctors have to “write off” the loss of $1.60; while with unassigned claims, the patient is responsible for paying the difference.

Non-participating optometrist: The non-participating physician is paid at 95 percent of the otherwise applicable Medicare allowed amount for a service or $95 in our example (compared to $100). Of this amount, Medicare would normally pay 80 percent ($76) and the beneficiary would pay the other 20 percent ($19). Under the sequester, Medicare would pay 98 percent of $76 or $74.48. In addition, the physician may charge up to 115 percent more than the $95 or up to $109.25 in this example. Thus, the patient could end up paying another $14.25 or a total of $109.25 and get back $74.48 from Medicare.

Medicare contractor Wisconsin Physicians Services (WPS) provided an example that includes a deductible: A provider bills a service with an approved amount of $100, and $50 is applied to the deductible. A balance of $50 remains. WPS normally would pay 80 percent of the approved amount after the deductible is met, which is $40 ($50 x 80 percent = $40). The patient is responsible for the remaining 20 percent coinsurance amount of $10 ($50 – $40 = $10). However, due to the sequestration reduction, 2 percent of the $40 calculated payment amount is not paid, resulting in a payment of $39.20 instead of $40 ($40 x 2 percent = $0.80).

WPS also provided an example of an unassigned claim with a deductible: A non-participating provider bills an unassigned claim for a service with a Limiting Charge of $109.25. The beneficiary remains responsible to the provider for this full amount. However, sequestration affects how much Medicare reimburses the beneficiary. The non-participating fee schedule approved amount is $95, and $50 is applied to the deductible. A balance of $45 remains. Medicare normally would reimburse the beneficiary for 80 percent of the approved amount after the deductible is met, which is $36 ($45 x 80 percent = $36). However, due to the sequestration reduction, 2 percent of the $36 calculated payment amount is not paid to the beneficiary, resulting in a payment of $35.28 instead of $36 ($36 x 2 percent = $0.72).

AOA members can monitor newsfromaoa.org for further updates or contact Kara Webb of the AOA Washington Office at 800-365-2219 with questions or comments.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: