{"id":12664,"date":"2021-01-06T18:16:45","date_gmt":"2021-01-06T12:46:45","guid":{"rendered":"https:\/\/www.medicalbillersandcoders.com\/blog\/?p=12664"},"modified":"2025-04-23T09:07:06","modified_gmt":"2025-04-23T09:07:06","slug":"what-is-medicare-sequestration","status":"publish","type":"post","link":"https:\/\/www.medicalbillersandcoders.com\/blog\/what-is-medicare-sequestration\/","title":{"rendered":"What is Medicare Sequestration?"},"content":{"rendered":"

Providers seeing a 2 percent payment decrease on their Remittance Advice (RA) is due to a mandatory sequestration payment reduction. Claim adjustment reason code (CARC) 253 is used to report the sequestration reduction. The code will appear as a CO 253 on the RA \u2018Sequestration-reduction in federal payment\u2019 as the reason.<\/p>\n

For the Medicare Fee-for-Service (FFS) program, claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will continue to incur a 2 percent reduction in the Medicare payment until further notice. Claims for durable medical equipment (DME)<\/a>, prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will continue to be reduced by 2 percent based upon whether the date-of-service or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.<\/p>\n

The claims payment adjustment will continue to be applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments. Though beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction,<\/p>\n

Example<\/strong><\/h3>\n

A provider bills a service with an approved amount of $100.00, and $50.00 is applied to the deductible. A balance of $50.00 remains. We normally would pay 80% of the approved amount after the deductible is met, which is $40.00 ($50.00 x 80% = $40.00). The patient is responsible for the remaining 20% coinsurance amount of $10.00 ($50.00 – $40.00 = $10.00). However, due to the sequestration reduction, 2% of the $40.00 calculated payment amount is not paid, resulting in a payment of $39.20 instead of $40.00 ($40.00 x 2% = $0.80).<\/p>\n

Key Points in Sequestration<\/h2>\n