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Medicare Sequestration Adjustment Codes Changed

February 10, 2014

The Budget Control Act of 2011 mandated across the board reductions in government spending.   In 2013 President Obama ordered a payment sequestration reducing Medicare fee-for-service payments by 2% across the board [1].     Medicare had been using Claim Adjustment Reason Code (CARC) CO-223 to communicate those adjustments.

In June of 2013 CMS created a new code, CO-253 to replace CO-223.  If your practice management system was configured to allow the 2% adjustment with code CO-223, the same needs to be set-up to handle CO-253 “Sequestration – Reduction in Federal Spending”[2].    That code went effective on January 6th so if you haven’t implemented this change yet, contact your system manager, billing team or vendor right away.    If you don’t implement this change it can affect your ability to post payments properly or orphan 2% balances on your accounts receivable.

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[1] CMS – “Medicare FFS Provider e-News, March 8th 2013” –

[2] CMS – “MLN Matters (mm8378) –

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