The Budget Control Act of 2011 became effective on March 1, 2013. The law provides for a reduction of discretionary federal spending through sequestration cuts of 2%, which include all payments made under the Medicare program. CMS implemented the 2% reduction on April 1, 2013.
The reimbursement rate that we pay to providers in our provider network is directly related to the rate that we receive from CMS. As a result, on April 1, 2013, we implemented a policy that reduced payments to participating providers so that reimbursement practices align with the payment methodology used by CMS. Effective April 1, 2013, participating provider reimbursement rates were reduced by 2%. This payment policy, and the resulting reimbursement reductions, will continue as long as the sequestration reductions mandated by the Budget Control Act of 2011 are applied by CMS to payments to Medicare Advantage plans.