State to Implement 2% Across the Board Medicaid Payment Reductions

The final 2011-12 state budget requires a 2% across the board reduction to most Medicaid payments. Such payment reductions will apply for dates of service on or after April 1, 2011. The reduction will remain in effect for dates of service through March 31, 2013. For services subject to the 2% reduction, the decrease will be reflected on the Medicaid check or EFT beginning on Cycle 1786 (check date 11/14/2011 with a release date of 11/30/2011). Paper remittances will display the actual reduction amount as a recoupment identified by Financial Reason Code ëFC2’ and the corresponding description of "State mandated payment reduction". Similarly, the 835 electronic remittances will carry the reduction amount in the PLB segment with the qualifier J1. Since the law is applicable to dates of service on or after April 1, 2011, the Department will implement a reconciliation of previously paid claims to determine the additional recoupment amount for those claims. Once completed, information pertaining to the manner in which these funds are to be recovered will be posted on the Department’s 2% Across the Board website:

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