CMS Proposes More Loopholes for E-Prescribing Penalty

July 19, 2011

July 19, 2011 — The federal government will begin to penalize some physicians next year for not electronically transmitting their Medicare patients' prescriptions to pharmacies. At the same time, the government wants to help physicians avoid paying those penalties.

In proposed policies for the 2012 Medicare Physician Fee Schedule (PFS) released earlier this month, the Centers for Medicare and Medicaid Services (CMS) unveils a plan to lower the bar for complying with its e-prescribing imperative, as well as giving physicians more time to do what it takes to avoid the penalty, euphemistically called a "payment adjustment." That adjustment for "unsuccessful" e-prescribers is 1% of PFS charges in 2012, 1.5% in 2013, and 2% in 2014.

The penalties come alongside bonuses for successful electronic prescribers in Medicare: 2% of PFS charges in 2009 and 2010, 1% in 2011 and 2012, and 0.5% in 2013. In its new policy recommendations, CMS states that the criteria for incurring the penalty need not be identical to the criteria for earning the bonus.

"In general, we believe that an incentive should be broadly available to encourage the widest possible adoption of electronic prescribing, even for low volume prescribers," CMS states. "On the other hand, we believe that a payment adjustment should be applied primarily to assure that those who have a large volume of prescribing do so electronically, without penalizing those for whom the adoption and use of an electronic prescribing system may be impractical given the low volume of prescribing."

In addition, CMS said that physicians and other prescribers who qualify for the bonus "have sufficiently demonstrated their adoption and use of electronic prescribing technology and thus should not be subject to the payment adjustment in a future year."

Less Work Needed to Avoid Penalty Than to Earn Bonus

As with its incentive program for electronic health records (EHRs), CMS is waving financial carrots and sticks to encourage clinicians to e-prescribe for the sake of patient safety and cost control. Both the federal government and the healthcare industry define electronic prescribing as transmitting a script from a clinician's computer to a pharmacy's, as opposed to writing a script with software and either faxing it or printing it out for hand delivery.

To receive the bonus for 2011, clinicians must generate at least 25 e-prescriptions on separate visits throughout the year, in conjunction with 56 particular billing codes for medical services, mostly having to do with evaluation and management. These codes must account for at least 10% of the clinician's Medicare allowed charges. In addition, clinicians must use a qualified e-prescribing software program.

It takes less work to avoid the penalty than to earn the bonus. Physicians will see their Medicare reimbursement shrink by 1% in 2012, the first year for payment adjustments, if they failed to generate at least 10 e-prescriptions through the first half of 2011. The penalty will not apply to physicians who lack at least 100 claims involving the 56 billing codes through the first half of the year, lack prescribing privileges, or were not licensed practitioners as of June 30, 2011. In addition, physicians also can claim a hardship exemption if they practice in a rural area without sufficient high-speed Internet access, or where pharmacies do not receive electronic prescriptions.

The penalty in 2013 currently depends on one's prescribing performance in 2011. If clinicians qualify for an incentive payment this year, they avoid the payment adjustment 2 years later.

In May, CMS proposed 4 other hardship exemptions for the 2012 penalty and a longer deadline for claiming one. One new exemption widely praised by physicians involves the federal incentive program for EHRs, which requires participants to e-prescribe. Under the May proposals, clinicians who register for the EHR incentive program and adopt certified EHR technology would be exempt from the e-prescribing penalty in 2012. The comment period on these recommendations ends July 25.

The CMS proposals released on July 1 would give clinicians a second chance to avoid penalties in 2013 and 2014. In case they failed to earn an e-prescribing bonus in 2011, clinicians also could escape the 1.5% reduction in 2013 if they report submitting at least 10 electronic prescriptions in the first half of 2012. In addition, these 10 prescriptions could be associated with any PFS billing code, not just the 56 codes required to earn the incentive.

The same rules would govern the 2014 payment adjustment: The adjustment would not hit clinicians who earn a bonus in 2012 or report at least 10 electronic prescriptions in the first half of 2013, regardless of the services rendered during those visits.

Proposals Fail to Lower Bar Enough, Says AAFP Official

The July proposals also apply 2 of the 4 new hardship exemptions from the 2012 penalty to 2013 and 2014; namely, the inability to e-prescribe because of local, state, or federal restrictions, and prescribing fewer than 100 scripts during a 6-month reporting period for payment adjustments. CMS did not recommend extending the exemption for clinicians who register in the EHR incentive program to 2013 and 2014, which was a decision that disappointed Steven Waldren, MD, director of the Center for Health Information Technology at the American Academy of Family Physicians.

Preserving the exemption based on participation in the EHR incentive program "would definitely lower the bar" for clinicians seeking to avoid the e-prescribing penalty, Dr. Waldren told Medscape Medical News. He also said that CMS should have addressed the issue of physicians finding it difficult to verify with the agency that they are complying with e-prescribing requirements.

As they stand, the proposed changes to the e-prescribing incentive program "lower the bar some," but nevertheless amount to "small potatoes," according to Dr. Waldren.

The comment period for the July 1 proposal, posted on the Federal Register, ends on August 30. The draft regulations explain several ways to submit comments.

More information on the e-prescribing incentive program, and on how to apply for an exemption, is available on the CMS Web site.


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