Sequester Could Have Negative Impact on Ambulance Medicare Payments

In the News…
Congress and President Obama are in the news again over another game of brinksmanship just two months after narrowly avoiding the drop over the “fiscal cliff.” This time the sequestration process threatens to cut Medicare reimbursements.

What is Sequestration?
For many years there has been this process of sequestration within our government. Basically, relatively small budget cuts or adjustments can be made to budget numbers with adjustments made that allow the government bureaucracy to withdraw amounts and redistribute those allocations in funding. The government basically “robs Peter to pay Paul.” There’s certainly some ridiculously complicated formula that probably takes fifty computer programs and a hundred high-paid bureaucrats to figure it all out.

In any event, this time around pre-determined budget cuts were put on the table with Medicare’s slice to be equal to two percent (2%) across the board. That’s a cut in Medicare payments to all providers, not just ambulance.

Averted in January
The sequester cuts were averted in January when Congress struck a deal with The White House to avert going over the fiscal cliff. However, that deal only allowed for review of the proposed sequester cuts for two months. Come March 1st that two-month period will expire. If Congress fails to act in yet another showdown with The White House, everyone’s Medicare reimbursements will decrease by two percent automatically.

$11 Billion in Savings
According to the Congressional Budget Office, the Medicare cuts will save the Federal Government a combined $11 billion. 

One commentary I read suggested that Medicare should shift its focus on even more fraud recovery efforts that would potentially offset the cuts, which would allow for the restoration of those payments to providers. In theory, that sounds great, but we all know in practice it takes time to investigate fraud allegations, bring cases to trial and demand repayments. 

Unfortunately, time is not in our favor in the ambulance industry, because most ambulance services are pinching every penny, especially with the price of fuel once again on the rise.

Retroactive Action?
There are signs that Congress and The White House may not be able to reach a compromise in just the seven days that remain before the end of February. If that were to occur, there has been talk of a potential deal in the weeks that follow the March 1st deadline which would then be made effective retroactive.

That course of action may eventually fix the overall payment problem in the long term, but could have an effect on your company’s short term cash flow. 

First, the Medicare Administrative Contractors that pay Medicare claims have to re-program their systems to adjust the payments and institute the cuts. That takes time, and CMS often allows those MAC’s to suspend the payment floor and hold payments for a short period in order to make those adjustments in their systems.

Second, once the systems are changed and there is a retroactive decision down the road, then those systems would have to be reconfigured once again, if and when a retroactive decision would be made to reinstate the cuts. We saw the disaster a few years ago when, in the middle of the calendar year, retroactive adjustments were made to payments, which then caused a myriad of problems for not only the Medicare payment system but also for all of the secondary payers as well.

In the meantime, ambulance billing offices pull their hair out trying to make sense out of remittances that are so complicated to review for proper payment. In addition, none of these even speak to the way payments from Medicare Advantage plans administered by commercial insurance payers are affected and impacted. Also, in many States, other payments such as Workers Compensation and Auto Insurance payments may be tied to the Medicare Fee Schedule.

Also, some ambulance services tie their facility contracts to the Medicare Fee Schedule,which then requires adjustments on a local level, with potential for all kinds of confusion on that front, too.

What’s Next?
What’s next is the question to pose to your Congressman.

Enhanced is monitoring any potential changes that will result from the discussions that will certainly be taking place over the next week. We’ll keep you posted if you’re a client.

What’s that? You’re not an Enhanced client?

That’s easy to change. Contact me today at and we’ll set up a time to talk about how you can become part of the Enhanced experience.

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