WASHINGTON, DC – Most HME providers who contract with Medicare Advantage plans apparently will not suffer from April 2013 sequestration cuts. Such contracts are typically negotiated at a set fee schedule amount that is agreed to by the managed care payer and the HME provider.


According to a legal source that provided guidance to AAHomecare officials, on May 1, 2013, CMS issued a memorandum addressed to Medicare Advantage Organizations (MAOs and others), which states that CMS is not “interfering in payment arrangements between MAOs and contract providers.”

CMS went on to instruct that “whether and how sequestration might affect MAO’s payments to its contracted providers are governed by the terms of the contract between the MAO and the provider.” CMS clarified that even after sequestration, Medicare Advantage plans must “pay providers under the terms of those contracts.” However, if contracts contain clauses that allow for the reduction, then the reduction is allowed.

Sequestration was imposed on all Medicare payments, reducing the allowed reimbursement amount by 2%. AAHomecare officials confirm that managed care payers cannot issue a 2% reduction of contract rates based on sequestration, although they can renegotiate rates based on the terms of their contracts

AAHomecare has resources available for members who have received the sequestration cut from managed care payers. Use this CMS memo issued May 1 to work with Medicare Advantage plans. Those with questions may contact AAHomecare’s Kim Brummett at 202-372-0750.