Medicare Penalties and Bonuses for Meaningful Use of EHRs Revamped as Part of the "Doc Fix" Bill

The American Health Lawyers Association last week published an analysis of the changes to the Medicare penalties and bonus payments for Eligible Professionals under the electronic health records meaningful use program under the Doc-Fix bill.  The changes restructure the penalties and bonus payments under the quality framework established by the Merit-based Incentive Payment System.  The e-alert is republished below.  Please note that any further reproduction of this work requires the advance written permission of the American Health Lawyers Association.

Medicare Electronic Health Record (EHR) incentive program payment penalties and bonuses have been swept into the modernization of the Medicare physician reimbursement system. The “Doc Fix” bill, formally titled the Medicare Access and CHIP Reauthorization Act, signed into law on April 16, sunsets the existing Medicare payment penalties for Eligible Professionals (EPs) who fail to achieve Meaningful Use of Certified EHR Technology (CEHRT). The law also creates a new Merit-Based Incentive Payment System (MIPS) that constructs a framework for quality incentives that includes Meaningful Use of CEHRT as one component.

The Medicare EHR incentive program payment adjustments for EPs in 2018 will be the last of the penalties under the current program. Medicare payment penalties for eligible hospitals, however, will continue unchanged. Although 2016 will be the final year of Medicare incentive payments to EPs, Medicaid EHR incentive program payments will continue through 2021 for both eligible hospitals and EPs.

MIPS continues the EHR payment penalties but also extends the incentives for Meaningful Use of CEHRT as a component of its framework for quality incentives. MIPS harmonizes three existing quality-incentive programs–the EHR incentive program, the Physician Quality Reporting System (scheduled to sunset in 2017), and the Value-Based Payment Modifier established under the Affordable Care Act. Although the law establishes the statutory framework, the U.S. Secretary of Health and Human Services (Secretary) will issue regulations to implement the law’s requirements.

MIPS Framework

Under MIPS, whether an EP is a Meaningful User of CEHRT is one of four performance categories used to calculate a composite score. The other performance categories are quality, resource use, and clinical practice improvement activities. Twenty-five percent of an EP’s composite score is based on Meaningful Use of CEHRT. The remainder is based on quality and resource use (each accounts for 30%) and clinical practice improvement activities (which accounts for the remaining 15% of the score). An annual performance threshold is to be set by the Secretary, based on either the mean or median scores of all EPs subject to MIPS. In addition, the Secretary shall establish a performance period (based on a prior year) for each payment year of MIPS, similar to the EHR incentive program.

The relative weight of the Meaningful Use component in the composite score may be further adjusted by the Secretary. If the proportion of EPs who are Meaningful Users of CEHRT is greater than 75% in any given year, the Secretary may lower the weight of the Meaningful Use measure to as little as 15%. Approximately 59% of Medicare EPs attested to Meaningful Use of CEHRT in 2013, according to the Office of the National Coordinator (ONC). However, MIPS defines an EP more broadly than does the Medicare EHR incentive program to include not only a physician but also a physician assistant, a nurse practitioner and a clinical nurse specialist, a certified registered nurse anesthetist, and a group that includes such professionals.

MIPS Payment Adjustments

EPs who fall below or exceed the performance threshold for the composite scores will be assigned payment adjustment factors that begin at 4% in 2019 and increase to 9% for 2022 and subsequent years. MIPS is budget neutral, as bonuses for EPs who score above the performance threshold will be funded by penalties imposed on EPs who fall below the threshold. The maximum calendar year payment adjustment factor for MIPS bonuses is equal to three times the payment adjustment factor for MIPS penalties for that same year. The Secretary will inform MIPS EPs of their final payment adjustment factors within 30 days after the end of a calendar year. EPs who receive a significant portion of their revenue from alternative payment models (such as Accountable Care Organizations or through medical homes that meet certain criteria) would be exempt from MIPS and would receive enhanced payments from Medicare.

Promotion of Interoperability

The law also promotes the widespread exchange of health information through interoperable CEHRT. It requires the Secretary to establish metrics for measuring interoperability by July 1, 2016 and to recommend actions to overcome barriers if the objectives are not achieved by the end of 2018. Further, both EPs and eligible hospitals will be required to attest that they have not “knowingly and willfully” taken actions to limit or restrict the compatibility or interoperability of the CEHRT. This requirement appears to respond to ONC’s increasing concern about this problem, expressed in a report to Congress in April.