CHA News Article

CMS Guidance Addresses Sequestration for Medicare Advantage, Part D Plans

The Centers for Medicare & Medicaid Services (CMS) has issued guidance to Medicare Advantage Organizations (MAOs) and Medicare Part D Prescription Drug Plans (PDPs) regarding the application of sequestration to program payments that went into effect April 1. The guidance notes that while sequestration will reduce payments by 2 percent to MAOs and PDPs, the plans are not allowed to reduce benefits, increase premiums or grow cost-sharing to offset reductions in payment rates. CMS clarified that sequestration cuts do not impact supplemental benefits and traditional benefits provided by plans to beneficiaries, and that Part D low-income subsidies and reinsurance are also exempt from sequestration. CMS also states that future incentive payments for Medicare Advantage electronic health records will also be reduced by 2 percent, due to sequestration, for the reporting periods beginning April 1. The complete CMS guidance is attached.