Sequestration is a 2% reduction that is automatically withheld from Medicare payments. The Bipartisan Budget Act of 2018 extends sequestration through 2027.

Sequestration reductions are borne by whoever payment is assigned to:

  • The Doctor if he is participating because he must accept assignment
  • The Doctor if he is non-participating and chooses to accept assignment
  • The Patient if the non-participating doctor does not accept assignment

The Carriers (MACs) may show this reduction in one of two ways:

  • The reduction may be indicted by showing it on the EOB with a Claim Adjustment Reason Code (CARC) of CO-235
  • It may also be indicated by reducing the approved charge.

If you are unsure about what your approved charges are, this is explained in great detail in our Medicare Payment Course (and it’s only $9).