On May 1st, CMS issued a letter to Medicare Advantage Organizations (MAOs) and others regarding the effect of the 2% reduction from sequestration. The letter contains very important information for providers, especially regarding their relationships with MAOs. Most importantly (for purposes of this short article) is the section entitled “Reducing Payments to Contracted Providers” which states (in essence) that MAOs are to follow the terms of their contracts for contracted providers. The trouble is that some MAOs are using the letter as a basis for an across the board 2% payment reduction! Most contracts don’t allow this. Even more egregious is the fact that some commercial payers are following suit! Providers faced with such reductions need to know their rights and need strong advocates to push back.
