Medicare providers have experienced a 2% sequestration that reduced their payments for almost two decades. In 2020, at the beginning of the COVID-19 pandemic, Congress provided full relief from this payment reduction. The relief was extended through March 2022. Beginning in April, providers will start seeing a phased-in approach to the return of sequestration. The dates to know are as follows:
- 1% payment adjustment (sequestration) effective April 1, 2022
- 2% payment adjustment (sequestration) effective July 1, 2022
In addition to the 2% sequestration, healthcare providers are facing an additional 4% sequestration beginning in 2023. This additional reduction is from the Pay As You Go Act (PAYGO) and was set to begin January 2022 but delayed until next year.
Medicare Payment Reductions: Brief History
In 2010, Congress passed PAYGO to limit federal spending. This act included up to 4% sequestration on Medicare payments to offset other federal spending.
In 2011, Congress passed the Budget Control Act to further help limit spending. This enacted a 2% sequestration that began in 2013.
When Congress acted to delay the 2% Medicare sequestration in December 2021, it also delayed the PAYGO payment reduction until 2023.