On March 22, 2013, CMS released a memorandum notifying Medicare Advantage Organizations (MAOs), that beginning April 1, 2013, payments to MAOs will generally be reduced by two percent; this process of payment reduction is referred to as sequestration. In accordance with implementation of the two percent payment reduction under sequestration applicable to Medicare fee-for-service, claims for health services under Blue Cross Medicare programs will be processed according to the subscriber’s benefit plan. After the applicable coinsurance and deductible amounts have been applied, a two percent reduction on the paid amount will apply. There will be no change to the subscriber’s liability for coinsurance. Providers cannot offset coinsurance or subscriber liability in an attempt to recoup lower payments due to sequestration.
In connection with the sequestration Blue Cross will begin to withhold the two percent payment reduction on Medicare programs claims processed after June 6, 2014. The recovery of the two percent payment reduction will be retroactive on Medicare programs claims processed with dates of service October 1, 2013, and after. We will only be targeting those claims where we made a net payment of $100.00 or greater. You will be able to identify these claims on your electronic 835 remittance advice. The Claim Adjustment Reason Code of 253 (Sequestration – reduction in federal payment) will be sent to identify this payment reduction. Claims adjustments are scheduled to begin the week of June 16, 2014.