Medicare EHR incentive program: Learn about payment adjustments and hardship exceptions

posted 03.19.13

By David Nilasena, M.D., chief medical officer for the Centers for Medicare and Medicaid Services’ Southwest region

If you are a Medicare eligible professional (EP), an eligible hospital or a critical access hospital (CAH), congressionally mandated payment adjustments will be applied if you do not demonstrate meaningful use of certified electronic health record (EHR) technology.

An overview of payment adjustments

Payment adjustments for providers eligible for the Medicare EHR incentive program are based on an EP’s prior reporting periods. The length of the reporting period depends upon the first year of participation.

• Payment adjustments for Medicare EPs begin on Jan. 1, 2015. The payment adjustment is 1 percent per year, cumulative for every year an EP is not a meaningful user. The maximum cumulative payment adjustment is 5 percent.
• Payment adjustments for Medicare subsection (d) eligible hospitals begin on Oct. 1, 2014. The payment adjustment is applicable to the percentage increase to the Inpatient Prospective Payment System (IPPS) rate. Hospitals that do not demonstrate meaningful use will receive a lower payment than the IPPS standard amount. The payment adjustment is cumulative for each year a Medicare subsection (d) eligible hospital does not demonstrate meaningful use.
• Payment adjustments for CAHs will begin with the fiscal year 2015 cost reporting period. The payment adjustment for CAHs applies to their Medicare reimbursement for inpatient services during the cost reporting period in which they did not demonstrate meaningful use. If a CAH has not demonstrated meaningful use, its reimbursement would be reduced from 101 percent of its reasonable costs to 100.66 percent.

All Medicare EPs, eligible hospitals and CAHs must continue to demonstrate meaningful use every year to avoid payment adjustments in subsequent years.

Categories for hardship exceptions

Under certain circumstances, hardship exceptions will be granted to EPs, eligible hospitals, and CAHs. Through an application process, providers must demonstrate to CMS that those circumstances pose a significant barrier to achieving meaningful use.

The categories for EPs to use to apply for hardship exemptions include infrastructure, newly practicing EPs, and unforeseen circumstances. EPs can also apply for exceptions based on their specialty or if they practice in multiple locations.

The categories for eligible hospitals and CAHs to use to apply for hardship exemptions include infrastructure, new CAHs, and unforeseen circumstances. View the CMS tip sheet on payment adjustments to read about the circumstances on the stage 2 website www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Stage_2.html.

Information on how to apply for a hardship exception will be posted on the CMS EHR incentive programs website www.cms.gov/EHRIncentivePrograms.

As the chief medical officer of the Centers for Medicare and Medicaid Services’ Southwest region, David Nilasena, M.D., MSPH, MS, has helped a broad range of health care provider groups understand the requirements of the electronic health record incentive programs since their inception in 2011.