Avoiding the 2015 Medicare EHR Incentive Program penalty

Medicare reimbursement penalties will continue to loom over the next few years for surgeons and other eligible professionals (EPs) who fail to participate in the Medicare Electronic Health Records (EHR) Incentive Program.

The EHR Program, established under the Health Information Technology for Economic and Clinical Health (HITECH) Act, authorizes the U.S. Department of Health and Human Services to provide financial incentives to EPs and hospitals that “meaningfully use” EHR technology.

First-time EPs who are unable to successfully begin participating in the EHR Incentive Program by July 1, 2014, or who began participation in calendar year (CY) 2011 or 2012 but could not participate during CY 2013, may receive a 1 percent penalty on their total Medicare Part B fee-for-service amount in CY 2015. These EPs should consider applying for an EHR hardship exception by July 1, 2014. This column discusses what surgeons need to know about the EHR Incentive Program to avoid penalties in 2015, as well as other program updates.

What are the 2014 Medicare EHR Incentive Program reporting criteria?

As discussed in the December 2013 Bulletin, EPs who participate in the EHR Incentive Program have different reporting options in CY 2014 than in previous years.*

Regardless of the reporting stage, EPs participating in the program will have the option of reporting on a quarterly basis. The Centers for Medicare & Medicaid Services (CMS) implemented the reporting change to allow EPs sufficient time to upgrade or adopt an EHR that meets the Office of the National Coordinator’s 2014 certification criteria, which allows EHR technology to be more efficient and provide improved security, interoperability, data portability, and other features.
EPs who began their first year of reporting in CY 2011, 2012, or 2013 may report quarterly in 2014. CMS has designated dates for 2014 EHR Incentive Program quarterly reporting (see Table 1).

Table 1. 2014 quarterly reporting timeline for EPs

2014 quarterly reporting for EPs beyond year one reporting (choose only one) Submission period for meaningful use
(Stages 1 and 2)
January 1–March 31
April 1–June 30
July 1–September 30
October 1–December 31
Two months following the end of the reporting period
(January 1–February 28)

First-year program participants should report on any 90-day period. EPs have until July 1, 2014, to begin reporting and should submit their data by October 1, 2014, to avoid penalties in 2015. EPs who begin reporting after July 1, 2014, are still eligible to receive up to $24,000, which is the maximum payment available. However, they will also receive the 2015 program penalty of 1 percent of their Medicare Part B fee-for-service amount.†

What are the EHR incentive payments and penalty amounts?

CMS began making Medicare EHR Incentive Program payments in CY 2011. EPs who began meeting the Stage 1 meaningful use requirement in 2011 or 2012 may earn an incentive payment totaling $44,000 over a five-year period. If EPs began reporting in 2013, they may earn a total incentive payment of $39,000 over a four-year period, and if EPs begin reporting in 2014, they may receive a total incentive payment of $24,000 over a period of three years. No incentives are scheduled for EPs who become first-time meaningful users in 2015 and beyond.

Although program penalties are not applied until CY 2015, surgeons will need to be able to achieve Stage 1 of meaningful use before then to avoid the payment penalty in 2015. Even though the incentive payments are set to end by 2016 for EPs who begin participating in the program by 2014, the penalties will begin in 2015 and will continue indefinitely. Table 2 describes the incentives and penalties from 2011 through 2015 and beyond.

Table 2. Maximum total amount of EHR incentive payments for a Medicare EP*

CY First CY in which the EP receives an incentive payment
2011 2012 2013 2014 2015 and on
2011 $18,000
2012 12,000 $18,000
2013 8,000 12,000 $15,000
2014 4,000 8,000 12,000 $12,000
2015 2,000 4,000 8,000 8,000 $0; 1 percent of Medicare fee schedule (penalty
2016 2,000 4,000 4,000 $0; 2 percent of Medicare fee schedule (penalty
2017 0 0 0 0 $0; 3 percent of Medicare fee schedule (penalty
2018 $44,000 $44,000 $39,000 $24,000 $0
*A CY equals a payment year.
Note: Medicare EHR incentive payments are subject to the mandatory reductions in federal spending known as sequestration. This 2 percent reduction will be applied to any Medicare EHR incentive payment for a reporting period that ended on or after April 1, 2013. If the final day of the reporting period occurred before April 1, 2013, those incentive payments will not be subject to the reduction. Maximum incentive amounts do not reflect the 2 percent cut.

What hardship exceptions are available to help me avoid the EHR Incentive Program penalty?

Hardship exceptions are available to EPs in certain situations. If an EP claims an exception and CMS approves it, the EP will become ineligible to receive an incentive payment and will be exempt from any penalties. An exception must be filed by July 1, 2014, to avoid the 2015 penalty; EPs may need to reapply annually for most of these exceptions. See Table 3 for a list of the exceptions.‡

Table 3. Exceptions available for EHR Incentive Program

Exception Description
Insufficient Internet access EPs must demonstrate they practice in an area without sufficient Internet access or face insurmountable barriers to obtaining the necessary infrastructure (such as lack of broadband)
New EP EPs who are new to practice and have not had time to become meaningful users may be granted a two-year limited exception to payment adjustments
Unforeseen and/or uncontrollable circumstances Examples include a natural disaster or another unforeseeable barrier. Also, this category includes 2014 vendor-related issues such as if the EP’s EHR vendor was unable to obtain 2014 certification or the EP was unable to implement meaningful use due to 2014 EHR certification delays during CY 2014
Lack of patient interaction EPs must demonstrate they meet the following criteria:

  • Lack of face-to-face or telemedicine interaction with patients
  • Lack of follow-up need with patients
Lack of control over availability of certified EHR technology (CEHRT) Lack of control over availability of CEHRT for more than 50% of patient encounters for EPs at multiple locations

CMS has provided step-by-step instructions on how to apply for exemptions.‡ EPs unable to upgrade to the 2014 EHR standards due to vendor-related issues should select “2014 vendor-related issues,” which CMS added under the “unforeseen and/or uncontrollable circumstances” hardship exception category in March 2014.‡ EPs who began participating in 2014 will be granted a two-year hardship exception automatically and will not need to apply for an exception. CMS will look at provider data in the Provider Enrollment, Chain, and Ownership System to grant this exception to newly practicing EPs.

How can I avoid the 2015 payment penalty?

There is still time for EPs to avoid the 2015 payment penalty if they are in the following situations:

  • If EPs began and/or continued to successfully report for the EHR Incentive Program in 2011, 2012, or 2013, they will avoid the 2015 payment penalty.
  • If EPs are participating in the EHR Incentive Program for the first time, they should begin their 90-day Stage 1 reporting by July 1, 2014, and submit their attestation to CMS no later than October 1, 2014.
  • If EPs began reporting for the EHR Incentive Program in 2011 or 2012, but for any reason were unable to continue reporting in CY 2013, they should consider applying for a hardship exemption, if applicable, by July 1, 2014.
  • If EPs have never reported for the EHR Incentive Program and cannot begin by July 1, 2014, they should consider applying for a hardship exception, if applicable, by July 1, 2014.

What resources are available to help me?

The following are American College of Surgeons (ACS) and CMS EHR Incentive Program resources:

  • The ACS EHR Web page
  • A Bulletin article
  • The CMS website: Refer to the Stage 2 resource for requirements as well as guidance on reporting CQMs in 2014
  • The CMS EHR Web page
  • The CMS EHR help desk: 1-888-734-6433
  • The ACS also has partnered with AmericanEHR Partners. ACS members may register with the AmericanEHR Partners to receive additional information on EHR vendor ratings, listen to podcasts, request proposals from vendors, receive e-newsletters, and more.

Any changes that CMS may make to the 2014 deadlines will be reported in various ACS communications such as the Bulletin, NewsScope, and The ACS Advocate.

*Gokak S. American College of Surgeons. The Medicare EHR Incentive Program in 2014. Available at: http://bulletin.facs.org/2013/12/the-medicare-ehr-incentive-program-in-2014/. Accessed April 11, 2014.

The Centers for Medicare & Medicaid Services. Medicare electronic health record incentive payments for eligible professionals. Available at: www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/MLN_MedicareEHRProgram_TipSheet_EP.pdf. Accessed April 4, 2014.

The Centers for Medicare & Medicaid Services. Eligible professional 2015 hardship exception application. Available at: www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/HardshipException_EP_Application.pdf. Accessed April 4, 2014.

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