Sequestration is an automatic cut to Medicare payments that reduces what doctors, hospitals, and other providers receive for treating Medicare patients

When Congress cannot agree on a budget, a law called the Budget Control Act of 2011 triggers sequestration — an automatic reduction in federal spending across many programs, including Medicare. Sequestration does not change your may be able to access for Medicare or your coverage. Instead, it lowers the amount Medicare pays providers for services. Providers may respond by reducing staff, limiting new patient appointments, or changing how they deliver care, which can affect how quickly you get an appointment or the services available to you.

Sequestration has been in effect since 2013, with some pauses during the COVID-19 pandemic. Congress can vote to suspend or replace it, but without action, the cuts continue. The current reduction is 2 percent across most Medicare services, though some services like hospice and certain preventive care are exempt.

Key Takeaways

  • Sequestration reduces what Medicare pays providers, not what you pay as a patient — your copays, coinsurance, and deductibles stay the same.
  • The 2 percent payment cut applies to doctors, hospitals, and most other providers who treat Medicare patients.
  • Providers may respond by hiring fewer staff, taking fewer Medicare patients, or delaying new services, which can make appointments harder to get.
  • Sequestration can be paused or ended by Congress, but it has remained in place since 2013 with only temporary breaks.

How Sequestration Affects What Providers Receive

Medicare pays doctors and hospitals a set rate for each service — a colonoscopy, an office visit, a surgery. When sequestration is in effect, Medicare automatically reduces that payment by 2 percent. A hospital that normally receives $1,000 for a procedure receives $980 instead. Over thousands of patients, that adds up to significant lost revenue.

The cut applies to nearly all Medicare services, including office visits, imaging, lab work, surgeries, and hospital stays. A few services are protected: hospice care, certain preventive screenings, and some mental health services are exempt or face smaller cuts. Rural hospitals and safety-net hospitals that serve low-income patients often feel the impact more sharply because they depend heavily on Medicare revenue.

What Sequestration Does Not Change for You

Your out-of-pocket costs — copays, coinsurance, and deductibles — do not change because of sequestration. If your plan charges a $20 copay for a doctor visit, you still pay $20. If you have a $1,500 deductible, that amount stays the same. Sequestration is a reduction in what the government pays providers, not a change to your benefits or your share of costs.

Your coverage also does not change. You remain covered for the same services under the same terms as before. Sequestration does not add new restrictions or remove covered services from your plan.

How Providers May Respond to Lower Payments

When Medicare payments drop, providers have limited options. Some hire fewer staff or reduce hours. Others stop taking new Medicare patients or limit the number they see. Some delay opening new clinics or purchasing new equipment. A few providers leave Medicare entirely, though this is less common because Medicare patients make up a large share of their business.

The result is often longer wait times for appointments, especially for specialists. You may find it harder to get a same-week appointment or to see a new provider. Some rural areas have been hit harder because they already have fewer doctors and hospitals, and losing even one provider can leave a gap in care.

Which Services Face the Largest Impact

Services that require expensive equipment or high staffing levels feel the cut most acutely. Imaging centers, surgical facilities, and dialysis centers often report significant revenue loss. Primary care offices, which operate on thinner margins, also struggle. Mental health providers and physical therapists frequently report that sequestration makes it harder to expand services or hire new clinicians.

Preventive services like mammograms, colonoscopies, and flu shots are either exempt or face reduced cuts, so access to these services has been more stable. However, the providers who deliver them may still reduce hours or staff in other areas.

What Congress Can Do About Sequestration

Congress can suspend sequestration by passing a law. This happened temporarily during the COVID-19 pandemic and at other times. Congress can also replace sequestration with a different budget plan. However, without action, the automatic cuts remain in place. Sequestration was designed to be painful enough that Congress would be forced to reach a budget agreement, but it has remained in effect for over a decade.

If you want to know the current status of sequestration, the Centers for Medicare & Medicaid Services (CMS) website publishes updates on payment rates and any changes to sequestration. Your provider's office can also tell you whether sequestration is affecting their practice.

How to Prepare for Potential Access Issues

If you are having trouble finding a provider who takes Medicare, start by calling your doctor's office directly rather than relying on online directories, which are sometimes outdated. Ask whether they are taking new Medicare patients and how long the wait is for an appointment. If they are not, ask for a referral to another provider in your area.

For specialists, ask your primary care doctor for a referral early — do not wait until you have an urgent need. Some specialists have long wait lists, and starting the process early gives you more options. If you live in a rural area or have trouble finding a provider, your state health department or your Medicare plan can point you toward resources.

Frequently Asked Questions

Does sequestration mean I will lose my Medicare coverage?

No. Sequestration does not change your coverage or your may be able to access for Medicare. It only reduces what Medicare pays providers for services. You remain covered for the same benefits under the same terms.

Will my copays or deductibles go up because of sequestration?

Sequestration does not directly change your copays or deductibles. Those amounts are set by your plan and by Medicare law, not by provider payment rates. However, if a provider stops accepting Medicare patients because of lower payments, you may have to switch providers, which could affect your out-of-pocket costs if your new provider is out-of-network.

Can my doctor refuse to treat me because of sequestration?

Doctors cannot refuse to treat you because you have Medicare. However, they can choose not to take new Medicare patients or to limit the number they see. If your current doctor stops accepting Medicare, you will need to find a new provider, but your coverage itself does not change.

How long will sequestration last?

Sequestration will remain in effect unless Congress votes to suspend or replace it. It has been in place since 2013, with temporary pauses. There is no set end date, so it may continue indefinitely unless Congress acts.

Where can I learn about sequestration is currently in effect?

The Centers for Medicare & Medicaid Services (CMS) website publishes current information on sequestration and Medicare payment rates. You can also call Medicare at 1-800-MEDICARE to ask about the current status.