We’re implementing temporary sequestration relief, DRG enhancement for Medicare Advantage providers treating COVID‑19 patients

In accordance with our provider agreements and changes to Original Medicare payments under the federal CARES Act, Blue Cross Blue Shield of Michigan and Blue Care Network are implementing temporary sequestration relief and diagnosis-related group, or DRG, enhancement for Medicare Advantage health care providers. This includes network and non-network providers.

These actions will offer financial relief to health care providers during the COVID-19 pandemic. They will apply to services provided to members with Medicare Plus Blue^SM and BCN Advantage^SM coverage.

We announced these changes through a web-DENIS message on April 20, 2020. Here’s what you need to know:

Temporary sequestration relief

Background information: Since 2013, 2% sequestration reimbursement reductions have been in place for our Medicare Advantage professional and facility providers. This is in accordance with the terms of our Medicare Advantage provider agreements that pay according to Original Medicare methodologies.

The 2% reimbursement adjustment is applied after determining any applicable member deductible, copayment or other required member cost sharing.

What’s changing: Consistent with Original Medicare, Blue Cross and BCN will temporarily suspend the 2% sequestration. This means that reimbursement to applicable provider types will increase by 2% effective for dates of service beginning May 1, 2020, through Dec. 31, 2020.

Reimbursement to providers who haven’t been affected by sequestration previously, such as durable medical equipment, end-stage renal disease and lab providers, won’t be affected by this change.

The 2% sequestration reimbursement reduction is expected to be reinstated on Jan. 1, 2021.

DRG enhancements for inpatient treatment of COVID-19 patients

The CARES Act includes a temporary 20% increase in the weighting factor for inpatient diagnosis-related group payments for Medicare patients diagnosed with COVID-19 during the COVID-19 emergency period. Blue Cross and BCN are working toward implementing the increased payments in the coming weeks.

Once implemented, the increased payments will affect discharges retroactively, dating back to discharges occurring on or after the emergency declaration on Jan. 27, 2020. Any affected claims will be reprocessed with no additional action needed by facilities.