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January 25, 2022

Sequester Cuts Act Extended – What Changes Health Care Providers Can Expect to See

Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act at the end of 2021, introducing several changes health care providers should be aware of. The bill will delay the impending reduction in Medicare rates that were set to take effect in early 2022, as well as increase the Medicare physician fee schedule (PFS) and remove the threat of scheduled PAYGO reductions. Below we summarize what this bill will mean for health care providers and what changes you can expect to see.

Protecting Medicare and American Farmers from Sequester Cuts Act – Key Changes

  • Relief from Medicare sequestration cuts – Per Congress, Sequestration is a process of automatic, usually across-the-board spending reductions under which budgetary resources are permanently cancelled to enforce specific budget policy goals. This act specifically will delay the 2% Medicare sequester cuts on physicians that were set to begin on January 1, 2022. It will also extend sequestration through March 31, 2022 and reduce the sequestration cut to 1% from April 1 to June 30, 2022. Health care providers can expect to see sequester percentages in 2030 increase as a result of this bill.
  • Pay-As-You-Go (PAYGO) reductions – Pay-As-You-Go cuts would have begun in January 2022, with 4% cuts across the board. Any sequester-ordered cuts are delayed until January 1, 2023 and the 2022 PAYGO scorecard will be added to the 2023 scorecard. With these delays in mind, this is a temporary fix. PAYGO cuts will need to be addressed by Congress at the end of 2022 in order to further delay or eliminate the cuts altogether.
  • Increase in Medicare PFS conversion – With this section included in the act, there will be a one-year 3.0% increase in the Medicare Physician Fee Schedule (PFS) in 2022. It’s important to note that this does not cancel out the scheduled 3.75% reduction and leaves a 0.75% cut in the PFS conversion factor for the 2022 calendar year.

Who Will Be Impacted by The Extended Act?

Health care providers, hospitals and doctors have been advocating for this bill to be pushed in order to keep up with the ongoing pandemic. With this bipartisan decision, any health care provider delivering services to Medicare beneficiaries will feel the impact of these funds. If your company has payer contracts that have not been reviewed or renegotiated, now might be the time to do so with the extra reimbursement coming in.

Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential impacts and benefits. The Anders Health Care Group can help you calculate what the new fee schedule would mean for your practice and review payer contracts. Contact an Anders advisor below to learn more.

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