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  • Sequestration Does Not Mandate 2% Medicare Advantage Plan Reduction to be Forwarded to Contracted Providers

    Physical therapists and other health care providers that contract with Medicare Advantage plans should check their agreements to make sure their payments aren't erroneously being cut by 2% as part of sequestration. CMS clarified in a May 1 memo to Medicare Advantage organizations and others that sequestration does not mandate a 2% reduction of reimbursement to Medicare Advantage plan contracted providers. Medicare Advantage plans themselves are subject to the 2% reductions; however, Medicare Advantage plans cannot pass along sequestration cuts to providers unless their contracts with specific providers permit the pass-through. If providers determine that their contracts don't permit these cuts, they should consider challenging the reductions as contrary to their participation and network agreements.

    Studies: Is Economy Less of a Factor in Slow Health Care Spending Growth?

    Two studies recently published in the journal Health Affairs counter an earlier Kaiser Foundation report that had credited the sluggish economy for much of the slowdown in the growth of health care spending. While the newer studies offer a higher possibility that health care reform is behind at least some of the slow growth, they don't specifically say so.

    The first study, concluded that the 2007-2009 recession accounted for 37% of the slowdown between 2003 and 2012, with another 8% attributed to a decline in private insurance coverage—leaving 55% unaccounted for. The authors concluded that the rest was the result of "a host of fundamental changes—less rapid development of imaging technology and new pharmaceuticals, increased patient cost sharing, and greater provider efficiency."

    If they're right, and the trends continue 2013-2022, they said, public sector health care spending could be as much as $770 billion less than predicted.

    In the second study, the authors analyzed 150 large employers covering some 10 million enrollees during the time period 2007-2011. They observed a slowdown in spending both when benefit design changes made the employer plans "less generous" and when benefit design was held "generally constant," concluding that "other factors, such as a reduction in the rate of introduction of new technology, were also at work," suggesting that the slowdown may persist as a result of greater efficiencies.