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Mandatory Payment Reductions in the Medicare Fee-for-Service (FFS) Program - "Sequestration"

The Budget Control Act of 2011 requires, among other things, mandatory across-the-board reductions in Federal spending, also known as sequestration. The American Taxpayer Relief Act of 2012 postponed sequestration for 2 months. As required by law, President Obama issued a sequestration order on March 1, 2013. The Administration continues to urge Congress to take prompt action to address the current budget uncertainty and the economic hardships imposed by sequestration.

This listserv message is directed at the Medicare FFS program (i.e., Part A and Part B). In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment. Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.

The claims payment adjustment shall be applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments.

Though beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction, Medicare's payment to beneficiaries for unassigned claims is subject to the 2 percent reduction. The Centers for Medicare & Medicaid Services encourages Medicare physicians, practitioners, and suppliers who bill claims on an unassigned basis to discuss with beneficiaries the impact of sequestration on Medicare's reimbursement. Questions about reimbursement should be directed to your Medicare claims administration contractor. As indicated above, we are hopeful that Congress will take action to eliminate the mandatory payment reductions.

As of January 14, 2001, ICE Health Service Corps (IHSC) has released the Detainee Covered Services Package. As part of this initiative, IHSC has developed a replacement system for the TARWeb referred to as the Medical Payment Authorization Request (MedPAR) system, the focus being to request authorization for payment of services rather than the provider seeking authorization for the medical services.

This new system utilizes a provider-determined self-certification as to the medical necessity of treatment and services. Authorization for payment of services will be dependent on the provider certifying medical necessity as defined in the Detainee Covered Services Package.

Authorization numbers will be automatically populated using the web-based MedPAR system. MedPAR requests submitted via fax or sent as an email attachment will require manual processing by IHSC Managed Care Coordinators. Once the authorization number is received, the provider may submit a medical claim to the VA Financial Service Center for payment.

The goals established for the MedPAR system include:

  • Self-certification of medical, mental health and dental services based on medical necessity;
  • An authorization system that is not complicated to use;
  • A reduction in processing time resulting in immediate appropriate medical, mental health and dental referrals; and
  • A system that decreases processing time for provider payments.

Major revisions to the Detainee Covered Services package are:

  • Removal of pre-existing conditions
  • Removal of focus on emergent or urgent care
  • Removal of list of covered and non-covered services
  • Responsibility borne by the provider(s) to certify medical necessity

If you have questions regarding what services are authorized, please contact the referring custodial facility or contact the appropriate IHSC's Managed Care Coordinator (MCC) and provide him/her with the Authorization Number.

View the Detainee Covered Service Package.

  • ACH Vendor/Misc. Payment Enrollment Form (DOC | 40 KB)
  • ADA - Dental Services (PDF | 607 KB)
    • Instructions (PDF | 86 KB)
  • CMS-1450 - Institutional Services (PDF | 1.1 MB)
    • Instructions (PDF | 90 KB)
  • CMS-1500 - Medical Services (PDF | 3.1 MB)
    • Instructions (PDF | 74 KB)
  • MedPAR Account Request (PDF | 62 KB) (DOC | 58 KB)
  • MedPAR Form (for when MedPAR is unavailable) (PDF | 657 KB)
  • The Health Service Provider shall submit claims using the appropriate form.
  • The Health Service Provider shall ensure that all claims associated with detainee medical services are submitted to IHSC by mailing claims to the following address with a copy of the MedPAR:
    ICE Health Service Corps
    VA Financial Services Center
    PO Box 149345
    Austin, TX 78714-9345

All health services require an authorization from IHSC. It is the responsibility of the Detention Facility to:

  • Complete a MedPAR for health services via MedPAR. This application is for Detention Facilities Internet access. Fax an authorization request if you do not have Internet access or MedPAR is unavailable.
  • Locate the appropriate health service provider; schedule the appointment for the health service; and provide transport to the health service.
  • Provide a copy of the authorized MedPAR to the health service provider prior to or at the time of treatment. An authorized MedPAR must be provided to the health service provider in order to:
    • Convey the guidelines concerning which health services have been authorized for payment.
    • Ensure timely proper reimbursement to the health service provider for authorized payment of health services. (Information contained on an authorized MedPAR must be submitted by the health service provider on the appropriate claim form).
  • Notify your IHSC MCC of any unscheduled inpatient admissions within 24 hours after the admission occurs and submit a MedPAR.

For questions concerning completion of a MedPAR, please contact your IHSC MCC.

For questions concerning IHSC's standard reimbursement for payment authorizations, please call 202-732-4600.