2% Medicare sequester delayed, PAYGO technically still on table

April 22, 2021
Although Congressional action staved off an immediate 2% cut to providers’ Medicare payments this year, attention now shifts to additional cuts mandated by federal spending controls.

Although Congressional action staved off an immediate 2% cut to providers’ Medicare payments this year, attention now shifts to additional cuts mandated by federal spending controls.

On April 14, President Joe Biden signed into law legislation that effectively extends the moratorium on Medicare sequestration through Dec. 31, 2021, as health care providers nationwide still contend with the fallout of the COVID-19 public health emergency. Congress has repeatedly extended this suspension of the annual budget control measure since the pandemic’s onset; however, approval of the recent $1.9 trillion COVID-19 rescue package sets up an even larger 4% cut to Medicare payments that Congress still must reconcile.

The 2% Medicare sequestration technically took effect April 1, yet the Centers for Medicare & Medicaid Services (CMS) held claims payments, in anticipation of Congressional action, to ensure providers weren’t impacted by the cuts. The CMS told providers in its MLN Connects newsletter that the agency has instructed Medicare Administrative Contractors (MACs) to: 

  • Release any previously held claims with dates of service on or after April 1.
  • Reprocess any claims paid with the reduction applied.

The automatic cut to Medicare Fee-for-Service claims is required by the 2011 Budget Control Act, but the Coronavirus Aid, Relief and Economic Security (CARES) Act temporarily suspended sequestration from May 1 to Dec. 31, 2020, then the Consolidated Appropriations Act of 2020 extended that suspension to March 31, 2021. To curtail federal spending, the 2011 Budget Control Act established Medicare payment cuts up to 2% annually, called sequestration, but Congress has regularly voted to overturn those cuts since 2013.

Repeatedly, the AOA voiced concerns about Medicare payment cuts amid the public health emergency, especially considering over a fifth of Medicare beneficiaries electively delayed care due to the pandemic, and urged doctors of optometry to reach out to their members of Congress to extend the suspension.

Such is the case, optometry’s advocates are needed once again to connect with their legislators as an unintended consequence of recent federal relief efforts may trigger an additional, more sizeable payment cut.

Pay-As-You-Go cuts still on the table

Signed into law on March 11, the $1.9 trillion American Rescue Plan Act replenished federal relief options, including Paycheck Protection Program (PPP) loans, Health and Human Services (HHS) Provider Relief Funds and Small Business Administration Economic Injury Disaster Loans (EIDL), and finalized specific tax changes. Although these aid opportunities help support many pandemic-struggling optometry practices, the massive legislation surpassed another federal spending threshold, known as the Statutory Pay-As-You-Go Act of 2010 (PAYGO). Essentially, PAYGO keeps newly enacted legislation from exacting a considerable toll on the deficit by limiting spending increases, the Congressional Budget Office notes.

Prior to its April recess, the House approved a bill that would reset the pay-as-you-go ledger to offset $36 billion in Medicare cuts, yet the Senate removed that provision. This 4% cut to Medicare payments could go into effect later this year if Congress does not act. But typically, Congress chooses to wipe clean the PAYGO scorecard and has never triggered a PAYGO sequester.

Despite this precedent, the AOA contends that while so many optometry practices remain focused on providing essential, primary eye health care to their communities in the middle of a pandemic, doctors shouldn’t have the specter of payment reductions hanging over their heads.

To help support the AOA’s advocacy on this issue, visit the AOA’s Action Center to contact your legislators, or text “PAYMENT” to 855.465.5124 to help drive Congressional support on this issue.

Join optometry’s advocates at Virtual AOA on Capitol Hill, May 23-25

As Congress mulls important legislation dealing with the COVID-19 public health emergency and other health care issues, now is the time for the profession to take a stand in support of the AOA’s federal advocacy.

Virtual AOA on Capitol Hill, May 23-25, is a remarkable opportunity for advocacy-minded doctors, optometry students and paraoptometrics to voice the profession’s priorities and leave a lasting impression on members of Congress. The AOA’s single-largest annual advocacy event and centerpiece of optometry’s federal advocacy efforts, Virtual AOA on Capitol Hill returns in a virtual format for 2021 with new priority issues that immediately affect optometry practices, their current viability and future prosperity.

What:  Virtual AOA on Capitol Hill
When: Sunday, May 23, through Tuesday, May 25 (online sessions open at various times)

For more information about Virtual AOA on Capitol Hill, agenda questions or the issues, email advocacy@aoa.org or call 800.365.2219. Please note: Virtual meetings with members of Congress are pre-arranged and coordinated through state associations.

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