CMS to pause Medicare payments until Congress passes sequester fix next month

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CMS is pausing Medicare claims payments to give Congress more time to pass a pause to a 2% cut to all Medicare payments set to go into effect Thursday. (Getty Images/Bill Chizek)

The Biden administration is temporarily holding Medicare claims with service dates on or after April 1 to ensure providers aren't impacted by a 2% cut to payments set to go back into effect on that date.

The Centers for Medicare & Medicaid Services' notice, which was obtained by Fierce Healthcare, comes nearly a week after the Senate passed legislation to extend through the rest of 2021 a moratorium on a 2% cut to all Medicare payments that was installed under the sequester.

The agency also notified Medicare Advantage and Part D plans that "CMS will resume standard sequestration reductions beginning with April 2021 payment for Medicare Advantage organizations and Prat D sponsors."

CMS added it will make retroactive adjustments for MA organizations and Part D sponsors in "a future payment month as necessary and as consistent with the law."

Congress installed a moratorium on the cut as part of the CARES Act to help providers facing major financial challenges due to the pandemic. The moratorium was extended in late December until March 31.

The House passed its own extension earlier this month, but the Senate version included several changes. A major difference was the Senate took out a provision that also prevented a 4% Medicare payment cut from taking effect in 2022.

Because the Senate altered the bill, the House must pass the moratorium again. But the House is in recess and will not return until April 13, meaning the cuts will take effect again until the chamber acts.

CMS likely anticipates the House will take up and pass the Senate bill, noting there could be “possible Congressional action” on the issue.

CMS' notice instructs Medicare Administrative Contractors (MACs) to withhold any claims unless they will affect providers' cash flows. 

"This will minimize the volume of claims the MACs must reprocess if Congress extends the suspension; the MACs will automatically reprocess any claims paid with the reduction applied if necessary," the notice said. 

The agency has made similar moves before when Congress has been late in passing similar payment delays. For instance, in 2015, the agency paused payments to doctors to ensure that a double-digit cut didn’t go into effect until Congress passed a fix.

Major provider groups such as the American Hospital Association and American Medical Association have been imploring Congress for another moratorium. They note that the pandemic is still having a major impact financially on providers.