Penalties for Physicians: They Keep Piling on

Kenneth J. Terry, MA


November 08, 2012

In This Article


The carrot and the stick: That's been the theme of information technology and quality improvement programs launched by the Centers for Medicare and Medicaid Services (CMS) in recent years. First, physicians receive incentives for meeting the program requirements, and later, those who don't comply are penalized.

Until now, the only doctors who have received a cut in their Medicare reimbursement for noncompliance are those who have declined to prescribe electronically. But in 2015, the penalty phases of other CMS programs -- including the electronic health record (EHR) incentive program, the Physicians Quality Reporting System (PQRS), and the value-based purchasing (VBP) program -- will kick in.

As a result, physicians who don't participate in any of the programs and don't do well in the upcoming VBP initiative might be looking at reductions of up to 4.5% of their fee-for-service Medicare reimbursement in 2015, and 8% or more by 2019.

While physicians in some specialties and practices with many Medicare patients face substantial losses if they don't participate in the first 3 of these programs, other doctors will not feel much financial pain if they ignore them. Moreover, some physicians who are close to retirement may decide that it's not worthwhile to invest time and resources in meeting the requirements of the government initiatives.

However you regard the government's carrots and sticks -- and the resources you must devote to obtaining incentives and/or avoiding penalties -- it's becoming clear that doing nothing is not an option.

Bruce Bagley, MD, Medical Director of Quality Improvement for the American Association of Family Physicians (AAFP), says physicians should understand that the penalties for nonparticipation will continue to grow. More important, he notes, the CMS programs are helping to drive a transformation of healthcare that doctors will not be able to ignore in the long run.

"These programs should be making us all think about a different way to practice medicine, where quality is built into the process of care, EHRs are essential, and registries are essential to do good chronic care," he notes. "This is all part of a stimulus to get us to improve our offices, not some low-hurdle thing with a few measures that you can do to get your money."

In contrast, Stephen R. Permut, MD, Secretary of the Board of the American Medical Association (AMA), views CMS's overlapping series of incentives and penalties as a distraction from the process of healthcare reform. "These piecemeal programs that carry penalties take doctors' eye off the real ball, which is to transform our practices for the future," he says.

Following is what you need to know about the penalty phases of the CMS programs.