As required by law, on March 1, 2013, President Obama issued a sequestration order triggering automatic cuts to a wide range of federal programs, including Medicare payments to providers and health plans. On March 8, 2013, CMS released its first guidance on sequestration, in the form of an “e-News” message to providers. CMS confirms that Medicare fee-for-service (FFS) claims with dates-of-service or dates-of-discharge on or after April 1, 2013 generally will incur a 2% reduction. Claims for DMEPOS supplies – including claims under the DMEPOS competitive bidding program – also will be reduced by 2%, if the date of service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013. CMS notes that the sequestration adjustment will be applied to claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments. Moreover, while beneficiary deductible and coinsurance payments are not subject to sequestration, Medicare’s payment to beneficiaries for unassigned claims is subject to the 2% cut. CMS encourages Medicare providers and suppliers who bill claims on an unassigned basis to discuss with beneficiaries the impact sequestration will have on Medicare reimbursement. Additional details on how sequestration affects Medicare are provided in our recent client alert.