In 2020, Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act, which suspended the 2% Medicare sequestration cuts to physician payments to mitigate the impact of pandemic-related expenses. “Sequestration” refers to across-the-board federal spending reductions mandated by the Budget Control Act of 2011.

On April 1, 2022, the Centers for Medicare and Medicaid Services began to phase back in the suspended sequestration cuts, with a 1% cut taking effect April 1. Effective July 1, 2022, the sequestration cuts have now reverted to 2% — the rate that was in effect prior to the public health emergency.

The sequestration cuts are applied to all claims after coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments.

Note: Though beneficiary payments for deductibles and coinsurance are not subject to the 2% payment reduction, Medicare payments to beneficiaries for unassigned claims ARE subject to the 2% reduction.