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CMS schedule of incentives and adjustments: the real story

It might seem, from the official schedule, that the eRx penalties are only now kicking in and that PQRS penalties are still two years away.

But the official schedule is misleading!

•  If you didn’t e-prescribe in 2011, the penalty will be in effect for 2013.

•  If you don’t e-prescribe in 2012, you will be penalized in 2014.

•  Next year (2013), if you don’t e-prescribe, you will be penalized in 2015 and if you don’t submit your quality data in 2013, you will be penalized for PQRS as well. The double adjustment in 2015 totals 3% and requires action in 2013 to prevent it.

•  On the average, the combined PQRS and eRx adjustments in 2015 will be $3,000 per provider and could be much larger than that for you depending on your specialty, productivity, and Medicare volume.

The Official Schedule



The official schedule is misleading because the naming conventions for the incentives and disincentives are significantly different. It’s also important to note that the delivery methods are also different.

Incentives are named after the reporting year on which they are based. You report by claims as they are generated or electronically in the first two months of the year after you provide the care. You are paid for that report in a lump sum in the 4th Quarter of that following year.

For example:

The 2012 Incentive for PQRS Quality Measures

•  You earn the 2012 Incentive by reporting quality measures for care provided to patients in the 2012 calendar year.

•  You report on that care (submit your quality measures to CMS) in January or February of 2013.

•  You get paid for the 2012 incentive in a lump sum in the 4th quarter of 2013, usually in October.

But the payment adjustment is named after the year in which the adjustment is made. Adjustments apply to each and every payment made for services delivered in the calendar year. Avoiding the adjustment requires quality submissions about the care delivered 2 years prior.

For example:

The 2015 Payment Adjustment for PQRS Quality Measures

•  You avoid the 2015 payment adjustment, by reporting quality measures for care to patients in the 2013 calendar year

•  You report on that care (submit your quality measures to CMS) in January or February of 2014.

•  However, if you don’t report for 2013, starting in January of 2015 CMS will adjust your payment for each and every service delivered to patients in 2015.


To understand the real schedule, let’s focus on the timeline of events rather than on the names of the incentives and disincentives.

The Real Schedule



*If you are late implementing eRx or miss the reporting deadlines, there are 2 additional opportunities to avoid the adjustment:

•  There is a claims submission opportunity in the first half of the year before the adjustment goes into effect.

•  There is a hardship exemption for which you can apply before the adjustment goes into effect.

The table, above, puts the focus on the timeframe of the two events over which you have control in the top two rows of the table,.

•  You have control over the care and the documentation of care delivered to patients in a reporting year.

•  You have control over whether or not you report.

The other events in the table are consequences that flow from the events over which you have control. Note that:

•  Your actions in 2012 and early 2013 will determine if you get penalized under the eRx program in 2014!

•  Your actions in 2013 and early 2014 will determine if you get penalized under the eRx and PQRS programs in 2015!

Look for my posts on:

•  How to earn the 2012 eRx Incentive Payment

•  How to avoid the 2014 eRx Incentive Payment

•  How to Earn the 2012 PQRS Incentive Payment

•  How to avoid the 2015 PQRS Incentive Adjustments

•  Combined reporting for eRx and PQRS

•  Combined reporting for PQRS and Meaningful Use

•  How to build a PQRS submission from a paper record without interrupting patient care


It’s not enough to be providing great care, in the emerging value-based healthcare world you are going to have to prove it.

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