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The 2% Medicare Reimbursement Reduction: Q&A on How it Impacts ASCs

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Angela Talton, MBA, RHIA, CCS, CPC, CPC-H, Sr. Vice President of Coding at National Medical Billing Services, answers the most frequently asked questions about the recent Medicare reimbursement reduction and how it will affect ambulatory surgery centers.

Q: Why is the 2% reimbursement reduction taking place?

Angela Talton: The Budget Control Act of 2011 mandates caps on discretionary spending, which under current law will be lowered beginning in January 2013. This is in an effort to remove $1.2 trillion of federal government spending over the next ten years. The Budget Control Act brought conclusion to the 2011 United States debt-ceiling crisis, which had threatened to lead the United States into sovereign default on or around August 3, 2011.  

Q: When does this change take effect?

The reductions in Medicare physician rates will begin with services provided on or after April 1, 2013, even though the sequestration order was issued on March 1, 2013, according to the Congressional Budget Office (CBO).

Q:  Will this change only affect my office patients?

The cuts will be applied to provider payments for services administered under Medicare Hospital Insurance (Part A), Medicare Medical Insurance (Part B), contractual payments to Medicare Advantage Plans (Part C) and Medicare Prescription Drug Plans (Part D), according to the CBO. This essentially means that every provider of care across the healthcare continuum will see a reduction in reimbursement.

Q: Is this reimbursement reduction temporary?


No. Reductions to Medicare will represent about 12% of the total federal spending reductions, or $9.9 billion, in part through lower payments to physicians and other health professionals for providing services.

In fact, the temporary tax cuts were scheduled to expire at the beginning of the 2013 calendar year. These included the 2001 and 2003 Bush tax cuts on income, capital gains and the estate tax, which had been extended in a 2010 tax deal under the Obama administration. Also included was a payroll tax cut that began as a result of the 2010 deal which had been most recently extended in an early 2012 tax deal.

Q: Are there any exceptions?

Yes. Low-income subsidies and additional subsidies for beneficiaries whose spending exceeds catastrophic levels in Part D are exempt from sequestration.

Additional questions may be directed to: Angela.Talton@nationalASCbilling.com

About National Medical Billing Services

National Medical Billing Services is a national healthcare revenue cycle management company with a sophisticated, boutique-like approach to operational delivery and client service. The company focuses solely on servicing ambulatory surgery centers (ASCs) and their affiliated surgeons. National Medical’s team of professionals consults with ASCs and their surgeons to help them maximize revenue and overcome industry challenges. National Medical also provides its clients with industry insights, education and data analytics to help them make the best business decisions possible. 

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