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Decisions doctors must make to avoid Medicare penalties

2013 will be a crucial year for physicians to avoid possible pay reductions under quality reporting and health information technology programs.

By Charles Fiegl — Posted Nov. 12, 2012

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A physician’s decision not to report Medicare quality measures or participate in paperless prescribing and health record programs in 2013 will be a costly one in the long run.

The programs have been voluntary for the past several years. However, federal laws require Medicare rates eventually to be reduced for physicians who do not participate in the physician quality reporting system as well as the electronic health records and e-prescribing incentive programs. The reason why 2013 is such a critical year for doctors is that Medicare officials are using it as a benchmark for future penalties in all of these programs.

The American Academy of Family Physicians estimates that participating in these initiatives next year could save a physician $19,000 in avoided penalties. Successfully reporting quality measures and achieving meaningful use of an EHR in 2013 will prevent a doctor’s Medicare rates from being reduced by 3.5% in 2015 for noncompliance.

“It might not seem like that much money now, but what if it goes up to 5%, 10% or 20%?” asked Bruce Bagley, MD, AAFP’s medical director for quality improvement. “Is it still optional? And what if commercial payers start to do it, too? It’s only going to get harder, so the sooner you get your feet wet, the better.”

The Centers for Medicare & Medicaid Services has developed a plan for how penalties will be levied on physicians. In general, the agency will apply pay reductions one or two years after the reporting year for the initiatives. An interactive American Medical News questionnaire can help doctors determine if they’re headed for steep reductions in Medicare pay in 2014 and 2015 based on their reporting activity in 2013.

Reporting e-prescribing codes, exemptions

For some physicians, preventing the electronic prescribing noncompliance penalty will mean using claims to report that they utilized the technology during at least 10 patient encounters between Jan. 1, 2013, and June 30, 2013. Others who earned e-prescribing bonuses in 2012 will be exempt from the 2% penalty in 2014.

CMS requires doctors who e-prescribe for patients to attach the code G8553 to the applicable claims for their Medicare services. The code signals that the physician used a health information technology system to send an electronic order for medication to a pharmacy.

Members of a physician group practice can work together to nullify the penalty, according to newer options added by CMS. For instance, groups of two to 24 eligible professionals can report the e-prescribing measure at least 75 times over the six-month 2013 reporting period to stop the penalty.

The e-prescribing system used must meet a series of criteria, too. For example, it must have the capability to generate an active medication list. Systems also must electronically send prescriptions, so directly faxing a prescription does not count. E-prescribing systems should provide information on formulary medications and patient eligibility requirements, and offer applicable information on lower-cost, therapeutically appropriate alternatives.

The Medicare agency has carved out a series of hardship exemptions for physicians to report if they work in areas without broadband Internet or if they do not prescribe due to their scope of practice or because a law prohibits them from doing so. CMS has created exemptions for those meeting the program’s separate EHR meaningful use criteria, which include an e-prescribing component. But earning an EHR bonus will not prevent the e-prescribing penalty automatically, so a doctor must report the exemption to CMS.

Attesting to meaningful use

CMS will pay an estimated $27 billion in EHR incentive payments through 2016, and each physician can earn up to $44,000 from Medicare or $63,750 from Medicaid by adopting and using the technology. Others who do not participate will see their Medicare pay reduced over the years, but Medicaid rates would not be decreased.

Federal law requires health officials to use criteria defining meaningful use of an electronic health record system when determining which health professionals earn incentives or get penalized. Standards, for example, require the physician to use an EHR to record patient demographics, vital signs and smoking status for a minimum threshold of eligible patients. The EHR incentive program requires professionals to register on the CMS website and then attest that they met meaningful use criteria.

New adopters of EHR technology are required to meet the first stage of meaningful use rules for two years before moving on to the second stage, which contains more core requirements and stricter guidelines. CMS granted “early adopters” of EHR technology an extra year under stage 1 criteria. Physicians who first reported achieving meaningful use in 2011 won’t need to move onto the next stage until 2014.

The 2014 calendar year also marks the last opportunity for eligible physicians and other health professionals to stop a 2015 Medicare EHR noncompliance penalty of 1% in 2015. An eligible professional must adopt and demonstrate meaningful use of an EHR system by Oct. 1, 2014. The penalty is set to grow to 3% by 2017 for physicians who continue not to participate.

Payment adjustments for quality reporting

Eligible professionals who do not successfully participate in the physician quality report­ing system in 2013 will see their Medicare pay reduced by 1.5% in 2015.

Physicians have a couple of options to report to the Medicare agency from among the 200 PQRS measures. Reporting measures group(s) through the registry option is presented as the easiest method for a physician to prevent a penalty and earn a bonus. CMS will provide a list of active registries in early 2013 — most of which will have been part of the program in 2012.

A registry will require physicians to select a measures group, such as diabetes, and use the registry application to report data for at least 20 patients. “The whole project will take you 2½ hours,” Dr. Bagley said. “It’s not the big hurdle everyone thinks it is.”

Reporting individual measures or measures groups using Medicare claims or an EHR also are options for physician practices. Physicians will receive a bonus equal to 0.5% of their 2013 Medicare pay if they participate in PQRS. The incentive will rise an additional 0.5% for physicians participating in a maintenance-of-certification program.

Failure to report PQRS measures successfully in 2013 will lead to a Medicare penalty of 1.5% on 2015 rates. The reduction will be 2% in 2016 and each subsequent year. For now, CMS is planning to use a PQRS reporting period well before the authorized penalty year to determine who will see their Medicare pay reduced.

For larger practices, failing to report PQRS measures also will lead to a 1% penalty in 2015 under Medicare’s value-based payment modifier program, which is designed to pay more to practices that provide care at a higher quality and lower cost than other large-group physicians who are subject to the modifier adjustment. Like the 2015 PQRS penalty, the 1% reduction will be based on 2013 PQRS data.

CMS is limiting the modifier’s scope to physicians practicing in groups of 100 or more eligible professionals, but agency officials have warned that this is only temporary. The modifier adjustment eventually will affect all physicians, CMS said in its 2013 Medicare final physician fee schedule.

“We urge solo practitioners and physicians in smaller groups to participate in the PQRS now, because when we propose in future rulemaking to apply the value-based payment modifier to smaller groups and solo practitioners, we anticipate basing the quality composite on PQRS quality data reported by such physicians,” the agency said. “We also anticipate that we would propose to increase the amount of payment at risk under the value-based payment modifier as we gain additional experience with the methodologies used to assess the quality of care furnished, and the cost of care, by physicians and groups of physicians.”

The modifier also can raise pay for eligible physicians who agree to have their performance measured against other large practices that sign on to the modifier. The Medicare agency will compile quality reports with risk-adjusted health care costs for patients under a physician’s care and compare the data to those of other large-group participants. Doctors providing high-quality services and/or limiting health spending in the years leading to the modifier’s effective date could receive higher pay that will vary based on the number of practices that receive modifier pay decreases.

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External links

Medicare & Medicaid EHR Incentive Program Registration and Attestation System (link)

Electronic Prescribing Incentive Program, Centers for Medicare & Medicaid Services (link)

Physician Quality Reporting System, CMS (link)

PQRS Registry Reporting, CMS (link)

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