How to Avoid Medicare Penalties in 2013

2013 is going to be a big year for physicians with regard to reporting Medicare quality measures and participating in e-prescribing and EHR incentive programs. All three programs have been voluntary — until now. Eventually, Medicare payments to physicians will be reduced if they don’t participate in the programs. And Medicare officials will use doctors’ performance in 2013 as a benchmark for future penalties.

Medicare’s Electronic Prescribing Incentive Program uses a combination of incentive payments and payment adjustments to encourage e-prescribing by eligible professionals. It requires doctors to attach code G8553 to Medicare claims that use an e-prescribing system. In addition to sending prescriptions electronically, the system must be able to generate an active medication list, as well as information on formulary medications; lower cost, therapeutically equivalent drugs; and patient eligibility requirements.

Doctors who fail to sufficiently use e-prescribing will see a 2% reduction in their Medicare Part B payments in 2014. To avoid that penalty, your practice must indicate (through its claims) that it has employed e-prescribing in at least 10 patient encounters between Jan. 1, 2013, and June 30, 2013. Physicians who earned e-prescribing bonuses in 2012 are exempt from the penalty.

Physicians can earn up to $44,000 from Medicare or $63,750 from Medicaid (one or the other, not both) by demonstrating their adoption and meaningful use of an EHR system. Medicare eligible professionals must initiate a qualifying EHR system by Oct. 1, 2014. Doctors adopting EHR technology for the first time must operate under the first stage of meaningful use rules for two years before moving on to the second stage. The sooner a practice gets started, the better. Those who have already achieved meaningful use need not move on to the next stage until 2014.

Beginning in 2015, eligible professionals who haven’t successfully demonstrated meaningful use will be subject to a payment adjustment. The payment reduction starts at 1% and increases each year that meaningful use is not  evident, up to a maximum of 5%.

The Physician Quality Reporting System (PQRS) is a Medicare program that uses a combination of incentive payments and payment adjustments to promote reporting of quality information by eligible professionals. Incentive payments are made to doctors who satisfactorily report data on quality measures related to Part B services they have provided. Beginning in 2015, the program applies a payment adjustment to eligible professionals who don’t satisfactorily report data on quality measures for covered professional services.

To participate in PQRS, doctors must report information from their practices on specified individual quality measures or measures groups (based on major diseases such as diabetes and osteoporosis). There are four ways these reports can be made:

Physicians who report quality measures satisfactorily receive a bonus of 0.5% of all their Medicare Part B charges. Those who fail to report successfully in 2013 will incur a penalty of 1.5% of their 2015 reimbursement rates. Moreover, the reduction in physician payments will grow to 2% in 2016 and subsequent years.

Practices of 100 or more physicians that fail to make PQRS reports in 2013 will receive a 1% penalty in 2015 under Medicare’s value-based payment modifier program. The program is designed to pay more to groups that provide higher-quality, lower-cost care. CMS plans to extend this program to smaller groups and solo practitioners over the next few years.

This year and for several years to come, most physician practices will be challenged as they implement these changes. That’s why it’s critical that physicians tap into the knowledge of their legal and financial advisors closely. •