Payment Adjustment Reminders

Published 12/11/2024

Mandatory Payment Reduction – Sequestration

Medicare fee-for-service (FFS) claims will continue to incur a 2 percent reduction in Medicare payment until further notice. The claims payment adjustment will continue to be applied to all claims after determining coinsurance, any applicable deductible, adding any positive Merit-based Incentive Payment (MIPS) adjustments 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.

This reduction appears on your remittance advice (RA) with CO-243 and an associated dollar amount.

Note: When the total allowed amount for an individual service is applied to the patient’s deductible the Sequestration reduction is not applied to that detail line.

Merit-based Incentive Payment System (MIPS) Payment Adjustments

  • If you participated in a performance period of the Merit-based Incentive Payment System (MIPS), you may receive a payment adjustment. Your payment adjustment is determined by the data you submitted on quality measures and activities for performance during a reporting period. You can review these details by accessing your performance feedback, which you can view by logging in here: https://qpp.cms.gov/.

MIPS positive payment adjustments appear on your RA with CO-144 and Reason and Remarks Code N807 along with an associated dollar amount. Negative amounts listed on an RA are processed as a positive amount paid.

  • MIPS-eligible clinicians may receive a positive, neutral, or negative payment adjustment.

MIPS negative payment adjustments appear on your RA with CO-237 along with an associated dollar amount. The associated dollar amount represents a reduction in payment.

MIPS technical assistance and support is available to help you navigate the MIPS program. Visit the QPP website https://qpp.cms.gov/ or call 866-288-8292 weekdays from 8 a.m. to 8 a.m. ET.

Calculating a MIPS Positive Adjustment with Sequestration Reduction

Table 1. Example.
Fee Schedule Amount 1,927.07
Applied to Deductible -40.50
Sub-Total 1,886.57 (1,927.07 – 40.50)
20% Co-Insurance -377.31 (1,886.57 x 20%)
Sub-Total 1,509.26 (1,886.57 – 377.31)
MIPS (indiv. prov. %) -28.37 (1509.26 x 1.88%) (amount appears on RA with CO-144 and CARC N807 and a negative sign)

Sub-Total

 1,537.63 (1,509.26 + 28.37)

2% Legislative

 30.75 (1537.63 x 2%) (amount appears on RA with CO-253)

Amount Paid

 1,506.88 (1,537.63 – 30.75)

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