Sequestration and Anesthesia Services

By July 18, 2016Health

Medical sequestration is the two percent payment reduction for the Medicare Fee-for-Service (FFS) program that affects claims with dates-of-service or dates-of-discharge on or after April 1, 2013 until further notice (1, 3). This two percent reduction also includes “claims for durable medical equipment (DME), prosthetics, orthotics, supplies” and all claims under the DME Competitive Bidding Program. Beneficiary payments for deductibles and coinsurance, however, are not subject to the two percent payment reduction. For those working in anesthesia services, note that drugs or any other health care item or service provided under the fee-for-service program are not excluded from the two percent reduction (1). The implementation of medical sequestration was a result of the Budget Control Act of 2011 and a sequestration order issued in March 2013 requiring reductions in Federal spending. Medical Sequestration alone is slated for a $11 billion cut (4).

According to a joint statement by the American Hospital Association (AHA), American Medical Association (AMA), and American Nurses Association (ANA), as many as 766,000 healthcare-related jobs could be lost by 2021 if these Medicare cuts remain (4). They also predict a “ripple effect” that will reduce the spending of goods and services by health care providers and organizations affected by sequestration. In regards to patient care, the AMA President Dr. Jeremy A. Lazarus states that “[c]oupled with the looming 27% Medicare physician payment cut, this 2% sequester will hurt patient access to care” and “[w]e need stability in Medicare physician payment […] to promote high-quality, high-value, better-coordinated care to our patients,” emphasizing that medical sequestration will harm both physicians and patients (4).

In September 2012, the American Society of Anesthesiologists (ASA) and 72 other medical organizations joined in to oppose the cuts in Medicare spending and advocated for Congress to repeal the Medicare Sustainable Growth Rate payment cuts (2). According to the ASA President, Dr. Jerry Cohen, largely hospital-based anesthesiologists will have significant implications because hospitals will be cut under sequestration. To best work within the new parameters, Dr. Cohen suggests that anesthesiologists lead coordinated care efforts in the surgical setting such as ASA’s Perioperative Surgical Home model of care in order to improve quality, ensure patient safety, and assist in cost containment. He emphasizes the importance of continuing ASA’s new models of coordinated care in order to continue improving quality and safety despite these reductions. The ASA has reached out to Congressional leaders to state their opposition to medical sequestration and advocate against these cuts, stating in a joint letter that “adequate and stable investments are necessary so that physicians can modernize their practices to support the coordinated care that will improve health and prevent costly complications, and enable the participation in new payment and delivery models” (2).

Those working in anesthesia services should note that the Center for Medicare & Medicaid Services (CMS) suggests Medicare physicians to continue reviewing the impact of this payment reduction on Medicare reimbursements (3). CMS also encourages healthcare providers to discuss the affects of sequestration with their patients (1). For more information on reimbursements, physicians can contact their Medicare Administrative Contractor (3, 6). Congress enacted medical sequestration in order to help reduce federal spending, but many in the medical community fear that sequestration will have negative impacts on patients, medical research, and the economy (5).