Suspension of 2% Foreclosure Reduction May Affect Repayment of Commercial Payers | King and Spalding


Section 4408 of the CARES Act suspends the 2% sequestration reduction of Medicare program payments that have been in place since April 1, 2013. The suspension of sequestration in Medicare will run from May 1, 2020 to May 31, 2020. December 2020 and will impact both the original Medicare service charges as well as Medicare capitation payments to Medicare Advantage (“MAO”) organizations. While it is clear that lifting the sequestration will result in higher reimbursement for providers paid directly by Medicare under the original Medicare program (Medicare Part A and Part B), reimbursement for MAOs and commercial plans is also likely to be affected. Additionally, although the law does not specify whether Medicare will implement the suspension of sequestration based on admission date or discharge date, as CMS initially implemented sequestration in 2013 based on release date, he may use the same standard with regard to implementing the suspension of forcible confinement.

Medicare Advantage reimbursement

In the Medicare Advantage program, the impact on provider reimbursement will depend on whether the provider has a contract with the Medicare Advantage plan and, if applicable, how the reimbursement language is worded.

  1. Medicare benefit without contract: Medicare rules require that MAOs pay non-contractual providers what that provider would be paid by Original Medicare. Accordingly, escrow applies to non-contractual Medicare Advantage charges for reimbursement of services. Since AMOs have imposed a 2% reduction on all claims from non-contractual suppliers, AMOs must now disable the reduction in the sequestration payment. If the plans continue to apply the 2% sequestration reduction during the suspension period, providers must appeal to the plan and then to CMS if the underpayments are not corrected. Due to the short appeal times, it is important for service providers to closely monitor reimbursement of non-contractual MAOs and to have processes in place to appeal quickly. Additionally, under CMS Section 1135 exemption on hospital operations and reimbursement during the coronavirus pandemic, non-contractual providers may claim to recover the services they provided during the period of the emergency. health department directly to CMS. This departure from the normal rule that CMS’s responsibility in the Medicare Advantage program is limited to the payment of MAOs is intended to enable Medicare Advantage beneficiaries to receive necessary care from non-contracted providers and to make available a additional funding for providers when they do so during the relevant period.

  2. Medicare benefit contractedWhether or not sequestration applies under a contracted Medicare Advantage agreement depends on the specific reimbursement language in the contract. While in many cases the MAOs should not have applied a 2% reduction in contractual service reimbursement fees, many plans have done so since the implementation of receivership in 2013. reductions, the CARES Act requires that these reductions cease. If a plan fails to stop imposing escrow reductions during the suspension period, suppliers should timely appeal irregular payments in accordance with contract appeal terms in order to preserve the right to pursue an appropriate payment. .

  3. How the specific AMOs plan to implement the suspension of the receiver: It remains to be seen how the changes made by the CARES Act to provider reimbursement are implemented by commercial health plans. Of the major health plans so far, only one – United Healthcare – has addressed the problem squarely. United Healthcare has published a bulletin on its website stating “If you have a fee-for-service contract with a Medicare Advantage plan based on the Medicare methodology or rates that have been adjusted for sequestration, including Medicare fee schedules, we have intent to implement the 2% Medicare escrow waiver for payments from physicians, facilities, ancillary providers and other healthcare professionals for service dates or discharge dates of May 1, 2020 as of December 31, 2020. ”As such, United has confirmed its intention to end service-based or discharge-based sequestration payment reductions for inpatient claims, which is in line with CMS guidelines on fee-for-service.

Commercial contractual reimbursement

Some business plans set reimbursement rates that refer to health insurance-based rates defined by IPPS, OPPS, or other Medicare reimbursement methodologies. In such contractual arrangements, the question of whether the regime was permitted to impose a reduction in escrow depends on the precise wording of the refund in the contract. However, if the plan imposed an escrow reduction based on a contractual reference to a Medicare-based payment methodology, the plan would have to suspend the escrow reductions during the suspension period. To prepare for the possibility that business plans do not deactivate escrow after implementing it under specific contractual terms, providers should review contracts for reimbursement structures that reference Medicare-based methodologies and follow suit. prepare to closely monitor affected reimbursements. Suppliers should also appeal in a timely manner for the underpaid.

Preserve reimbursement rights

To prepare for the suspension of sequestration, we recommend that providers review their managed care contracts with Medicare Advantage and commercial providers to determine the extent of the impact of the CARES suspension of sequestration. If a provider challenges the imposition of sequestration reductions by health plans that have been resolved by a regulation or other agreement or amendment, those providers should collect and review those agreements to determine what they need in the event of a change. kidnapping. The refund language and the language of the settlement agreement will vary and will require individual analysis to determine the impact of the stay in receivership. Since many contracts set short deadlines for appealing underpayments, we recommend that you begin this contract review process immediately.


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