MACs to Temporarily Hold Claims as 2% Medicare Sequestration Cuts Sit in Congressional Limbo

The pandemic prompted Congress to pause an across-the-board Medicare rate cut that had been in effect since the Obama administration, but a stalemate in Washington over extending the relief will bring a slight payment hiccup over the coming weeks.

While both houses of Congress have approved extensions of the 2% Medicare sequestration holiday, they did so through separate, distinct bills — meaning providers will now have to wait until the House returns from its Easter and Passover recess on April 13 for a definitive answer, as our sister publication Home Health Care News reported earlier this week.

Designed to curb Medicare spending in the wake of the Great Recession, the sequestration rule has automatically deducted 2% from each provider’s Medicare reimbursements since 2013. Late last March, Congress moved to suspend the sequestration cuts through the end of 2020 in light of the growing COVID-19 crisis, and lawmakers late in the year extended the 2% holiday through the end of March 2021.


The House earlier this month passed a bill that would extend the sequestration pause through the rest of 2021, while also waiving pay-as-you-go (PAYGO) budget rules that typically serve as a check on increases in federal spending. The Senate passed its own separate legislation last week to uphold the sequestration delay for the duration of the federal coronavirus emergency; that bill did not include the suspension of the PAYGO provision, which could bring up to 4% in additional Medicare cuts without further Congressional action.

Because the bills are distinct, there’s no one piece of legislation available for President Biden to sign into law until the House returns from the holiday.

In the meantime, the Centers for Medicare & Medicaid Services (CMS) has instructed Medicare Administrative Contractors (MACs) to place a processing hold on all Medicare claims dated April 1 or later.


CMS asserted that the hold will last “a short period without affecting providers’ cash flow.”

“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,” CMS announced through its Medicare Learning Network portal.