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CMS Report Details Incentive Program Winners and Losers

A new government report details how a Medicare program that promotes electronic prescribing turned the corner from reward to penalty. In 2011, the Centers for Medicare & Medicaid Services (CMS) bestowed $285 million in bonuses on some 174,000 clinicians who electronically transmitted prescriptions to pharmacies, the agency stated in a report issued last week. Of those clinicians, almost 34,000 belonged to group practices that collectively rather than individually qualified for $17 million worth of incentive payments. The number of these "successful electronic prescribers" in 2011 doubled from the year before, and the total payout increased 5% even though the individual bonus decreased from 2% of Medicare reimbursement to 1%. The average payment was $1912 per clinician and $6609 per practice. That was motivation by carrot. Then came the stick. In 2012, 136,000 clinicians saw their Medicare reimbursement reduced by 1% because they were not bonus-qualifying e-prescribers in the first half of 2011, according to the CMS report. It was the debut of what CMS euphemistically calls a "payment adjustment" in its incentive program. The casualties in 2012 included some 24,000 family physicians, 21,000 internists, and 9000 nurse practitioners. Table 1. Specialties Hardest Hit by the 2012 E-Prescribing Penalty

Specialist/Profession Number of Clinicians Subject to 1% Medicare Penalty
Family physician 24,474
Internist 20,813
Nurse practitioner 9051
Psychiatrist 8421
Podiatrist 6350
Cardiologist 5889
Orthopedic surgeon 5790
Ophthalmologist 5077
Physician assistant 4491
Gastroenterologist 3339

Source: CMS Another 544,000 clinicians avoided the e-prescribing penalty in 2012, either because they came under various automatic exclusions, received a hardship exemption, or reported a token number of e-prescriptions in the first half of 2011 that did not qualify for a bonus. This year is the last [I1]one in which clinicians can receive an e-prescribing bonus, now at 0.5% of Medicare reimbursement. To earn it, they must meet the criteria for successful e-prescribing during 2012. Meanwhile, the penalty has grown to 1.5% this year for clinicians who were not successful e-prescribers in 2011 or who failed to generate at least 10 e-prescriptions in the first half of 2012. In 2014, the finale of the incentive program, the penalty increases to 2%. Like Hockey, Medicare Has Lots of Penalties In another Medicare incentive program called the Physician Quality Reporting System (PQRS), some 267,000 clinicians in 2011 received $262 million in bonuses on an individual or group-practice basis — mostly the former — for reporting their performance on measures such as screening patients for unhealthy alcohol use and vaccinating seniors against pneumonia. Median incentive payments to individuals ranged from $3009 for radiologists to $6.48 for certified nurse midwives, according to CMS. Table 2. Top Specialties to Receive Medicare Bonus in 2011 Under PQRS

Specialty Number of Clinicians Who Qualified for Incentive Payment* Median Incentive Amount ($)
Emergency physician 32,588 474.54
Family physician 21,377 449.82
Internist 20,621 778.74
Anesthesiologist 19,480 349.61
Nurse anesthetist 14,014 158.70
Radiologist 13,776 1129.25
Physician assistant 11,314 130.90
Nurse practitioner 8977 124.84
Cardiologist 8053 2564.16
Ophthalmologist 7011 3009.49

*Specialty totals do not include clinicians who belonged to group practices that qualified for a PQRS bonus in their own right. Source: CMS The agency did not lower anyone's Medicare reimbursement in 2011 or 2012 for not participating in PQRS. However, this pay-for-reporting program will enter its penalty phase in 2015, when a 1.5% Medicare pay cut will hit clinicians who fail to satisfactorily submit quality data through PQRS for 2013. The penalty increases to 2% in 2016 and beyond. Physicians face additional Medicare penalties in 2015. That year, the government's program to promote "meaningful use" of electronic health record systems will impose a 1% pay cut on physicians who flunk its digital standards. And 2015 is when CMS introduces its Physician Feedback/Value-Based Payment Modifier Program. This pay-for-performance program, created by the Affordable Care Act (ACA), will raise or lower fee-for-service rates with a "value-modifier" that reflects the quality and cost-efficiency of a clinician's services. CMS will apply the value modifier only to practices of 25 or more physicians in 2015 and limit the penalty to 1%. The ACA requires that all physicians be subject to the value modifier in 2017.

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