The Centers for Medicare & Medicaid Services (CMS) Retiree Drug Subsidy (RDS) Program is subject to the mandatory reductions in federal spending, or sequestration, in accordance with the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended. Beginning with plan sponsors' incurred costs reported on or after April 1, 2013, and for the duration of the sequestration period, CMS applies a mandatory two percent (2%) payment reduction to all plan months when calculating an RDS application's final Reconciliation subsidy payment.
In the coming months, CMS’ RDS Center will implement an update to the sequestration policy, whereby the mandatory two percent (2%) payment reduction will be applied at each interim payment request rather than applying the reduction only to the final payment.
Additional information about this change will be provided to the RDS Plan Sponsor community as details become available. If you have questions about the mandatory payment reduction or need additional information, please contact CMS' RDS Center.