CMS Puts Away the Carrot and Brandishes the Stick: How to Plan in 2015 to Protect Your 2017 Income from CMS Penalties

CMS Penalties Begin to Pile Up

The cumulative penalties from Meaningful Use, PQRS and Value-based Modifier (VBPM) are piling up.  There was a time when we thought of Meaningful Use and PQRS as revenue enhancing programs.  Incentives that we could opt in or out of at our leisure.  And Value based payment modifiers seem to have completely slipped under the radar for the majority of groups.

For any group with a significant percentage of Medicare in their payer mix these are simply not optional programs any more because the penalties for not participating in these programs are cumulative and represent a significant portion of a practice’s reimbursement and revenue.

While these programs represent a considerable administrative burden, because the penalties are so high few practices can afford consider them optional.  The average profit margin for ambulatory practices is low – about 12%.  So the cumulative affect of these penalties can represent whether a practice is profitable or not.

Kathy McCoy (who just continues to deliver valuable content by the way) sums up some of the impact of the penalties in her recent article.

With all of the challenges of attesting for Meaningful Use Stage 2 in 2014, rumblings about opting out of the program have been coming from a number of practices. That is a decision that every provider needs to make for him- or herself, but make sure you are making an informed decision about Meaningful Use and other CMS programs, knowing how this will impact your future practice income.

As we have mentioned on this blog in the past, these CMS programs, from Meaningful Use to PQRS, eRX and others, were never truly designed to be incentive programs. The fact is that these are penalty programs, front-loaded with incentives to encourage rapid change.

These programs will hit our bottom lines in 2017 as the table below demonstrates:

CMS Penalties Begin to Pile UpRemember, these are cumulative.

  • 2% penalty for PQRS
  • 4% penalty for the value-based modifier program
  • 3% penalty for Meaningful Use

That’s a total of 9%.

Karen goes on to quantify the financial impact:

As you can see above, what all of these penalties add up to is a potential loss of 9% of your Medicare reimbursement in 2017, depending on your level of past participation in Meaningful Use. For some of the most highly reimbursed specialties, this can mean a loss of more than $20,000 per provider for the year—right off the top. Here’s a look at the impact for five key specialties:

CMS Penalties Begin to Pile UpI agree with Karen’s following comments and conclusion whole heatedly.  We’ve barely scratched the surface on the topic of value-based payment modifier (VBPM) but there is ample good advice here for every practice.

Also important to note is the fact that in 2015, you lose an option you have for 2014. For this year, providers could avoid a payment reduction for 2016 by using the claims method to report on at least three PQRS measures and for each measure, reporting on at least 50 percent of eligible patients. This option is not available for 2015. We don’t recommend this method anyway, since it doesn’t take advantage of the alignment between PQRS and Meaningful Use, essentially requiring you to duplicate effort.

Overall, the key take-away here is that it’s becoming more important to report successfully for PQRS, and for Meaningful Use as well, due to the cumulative effect of these penalties. It’s no longer a matter of 1% or 2%; it’s becoming a serious total penalty.

– James