Updates on sequestration and DRG enhancement for Medicare Advantage providers

Earlier this year, the federal CARES Act implemented temporary sequestration relief and inpatient diagnosis-related group enhancement for Original Medicare payments. Blue Cross Blue Shield of Michigan and Blue Care Network applied this financial relief to our Medicare Advantage plans (Medicare Plus Blue℠ and BCN Advantage℠) for both network and non-network providers. We told you about this in an April web-DENIS alert, a June Record article and a July-August BCN Provider News article (Page 10).

Here are updates on those two temporary changes.

Temporary sequestration relief scheduled to end
At the time of this publication, the federal government has scheduled temporary sequestration relief to run through Dec. 31, 2020, dates of service. Blue Cross and BCN will re-implement sequestration in accordance with its provider agreements. This is currently scheduled to happen Jan. 1, 2021. If the federal government amends the sequestration restoration date, Blue Cross and BCN will also do so to remain in alignment with the Centers for Medicare & Medicaid reimbursement policy.

What this means for you
Given this change in CMS payment methodology, this means that for both professional and facility providers, all of the Medicare Advantage services that had a 2% reduction in the amount paid prior to May 1, 2020, dates of service due to sequestration will once again have the reduction applied beginning Jan. 1, 2021, or any date after that as amended by the federal government. As was our previous practice, the claims payment adjustment will remain consistent with CMS payment methodology in that it will be applied to claims after determining any applicable member deductible, copayment or other member liability.

Durable medical equipment, end-stage renal disease services and lab providers aren’t affected by sequestration.

DRG enhancements
The CARES Act includes a temporary 20% increase in the weighting factor for inpatient DRG payments for Medicare patients diagnosed with COVID-19.

This 20% increase applies to discharges occurring on or after the emergency declaration on Jan. 27, 2020, and is expected to continue until the public health emergency ends. Providers are expected to follow CMS guidance indicating that claims eligible for the temporary increase must have a positive COVID-19 laboratory test in the patient’s medical record effective for admissions on or after Sept. 1, 2020.

More information is available in the MLN Matters^® article SE20015 updated Aug. 17, 2020.**

**Blue Cross Blue Shield of Michigan and Blue Care Network don’t own or control this website.