CMS Incentives & Penalties: An Overview of the Carrots &

Sticks of Health Reform

Health care providers today face an overwhelming number of change initiatives that aim to move the provider community in a given direction by leveraging incentives and penalties—otherwise known as "carrots and sticks."

Many of the CMS program penalties are cumulative, meaning providers who fail to meet the requirements for PQRS reporting, e-Prescribing, Meaningful Use and other programs will be subject to allamassed payment adjustments.

CMS Incentives & PenaltiesProgram 2012 2013 2014 2015 2016 2017

Medicare e-Prescribing Incentive Program*

Carrots

1.0% 0.5%

Sticks

-1.0% -1.5% -2.0%

Medicaid EHR Incentive Program

Carrots

Year 1: $21,250Years 2-6:

$8,500

Year 1: $21,250Years 2-6:

$8,500

Year 1: $21,250Years 2-6:

$8,500

Year 1: $21,250Years 2-6:

$8,500

Year 1: $21,250Years 2-6:

$8,500

Year 1: $21,250Years 2-6:

$8,500

Medicare EHR Incentive Program

Carrots

Up to $18,000 Up to $15,000 Up to $12,000 Up to $8,000 Up to $4,000

Sticks

-1.0% -2.0% -3.0%

ICD-10 Changeover Carrots Sticks

None None No $ No $ No $ No $

CMS Physician Quality Reporting System

Carrots Sticks

0.5% 0.5% 0.5% -1.5% -2.0% -2.0%

CMS Value-Based Modifiers

Carrots Carrots/Sticks

None None None +/- TBD +/- TBD +/- TBD

Medicare e-Prescribing Incentive Program

Program 2012 2013 2014 2015 2016 2017Medicare e-Prescribing Incentive Program*

Carrots1.0% 0.5%

Sticks-

1.0%-1.5% -2.0%

Medicare e-Prescribing Incentive ProgramIncentives:• Reporting period: Jan. 1 - Dec. 31,

2012 (no sign-up required)• Three ways to report: claims,

registry or EHR Direct• Claims-based Reporting: HCPCS

Code G8553 on 25 unique visits

Medicare e-Prescribing Incentive ProgramPenalties: • Reporting Period: Jan. 1 – June 30,

2012• Claims-based Reporting: Must

report HCPCS code G8553 on 10 unique visits by 7.27.2012 to avoid the penalty

Medicare EHR Incentive Program

** Meaningful Use incentives will vary based upon the EP’s year initiated and allowable charges.

Program 2012 2013 2014 2015 2016 2017Medicare EHR Incentive Program

CarrotsUp to

$18,000Up to

$15,000Up to

$12,000Up to

$8,000Up to

$4,000Sticks

-1.0% -2.0% -3.0%

Medicare EHR Incentive Program• Eligible Provider Types - MD, DO,

DDS, DMD, DPM, OD, DC• Must have PECOS Number with

CMS• Must register with CMS at

cms.gov/EHRIncentivePrograms/

Medicare EHR Incentive Program• Year 1: 15 Core + 5 Menu

Objectives/Measures for continuous 90 days

• Year 2 and Beyond: Full Year of Meaningful Use

Medicaid EHR Incentive ProgramProgram 2012 2013 2014 2015 2016 2017

MedicaidEHR Incentive Program

CarrotsYear 1:

$21,250Years 2-

6:$8,500

Year 1: $21,250Years 2-

6:$8,500

Year 1: $21,250Years 2-

6:$8,500

Year 1: $21,250Years 2-

6:$8,500

Year 1: $21,250Years 2-

6:$8,500

Year 1: $21,250Years 2-

6:$8,500

Medicaid EHR Incentive Program• Year 1: Adopt, Implement or

Upgrade Certified EHR• Year 2: Demonstrate Meaningful

Use for 90 continuous days• Years 3 through 6: Demonstrate

Meaningful Use for full year

The ICD-10 Changeover

Program 2012 2013 2014 2015 2016 2017ICD-10 Changeover

Carrots SticksNone None No $ No $ No $ No $

The ICD-10 Changeover• Effective Date: Oct. 1, 2013; NPRM

pending for delay to Oct. 1, 2014• Transition requires maintenance of

both ICD-9 and ICD-10:o DOS < Oct. 1, 2014 → ICD-9o DOS = Oct. 1, 2014 or > → ICD-10

The ICD-10 Changeover• CMS and other payers cannot process

ICD-10 claims before Oct.1, 2014• Applies to all payers and providers• Does not affect CPT coding

CMS Physician Quality Reporting System

Program 2012 2013 2014 2015 2016 2017CMS Physician Quality Reporting System

Carrots Sticks0.5% 0.5% 0.5% -1.5% -2.0% -2.0%

CMS Physician Quality Reporting System$1,000• Penalties begin in 2015, but are

based on participation in 2013• Three ways to report: claims, registry

or EHR Direct• Eligible Professionals include those

who provide services paid based on the Medicare PFS

CMS Value-Based Modifier Payment Program

Program 2012 2013 2014 2015 2016 2017CMS Value-Based Modifiers

Carrots Carrots/SticksNone None None +/- TBD +/- TBD +/- TBD

CMS Value-Based Modifier Payment Program• VBM will compensate physicians

differentially based upon a composition of quality and costs.

• Physician performance will be measured by clinical data reported through PQRS between 2015 and 2017

CMS Value-Based Modifier Payment Program• The VBM applied will be -1 percent in

CY2015 for groups of more than 25 physicians that do not participate in PQRS in CY2013, which is the performance period for the initial VBM.

• e-Prescribing Incentive Program• EHR Incentive Programs• Physician Quality Reporting System• ICD-10• CMS Value-Based Payment Modifier

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