Hardship waivers last chance to avoid Medicare e-prescribing penalty

Physicians facing a 2012 pay reduction will not receive any more time to report paperless prescription activity.

By Charles Fiegl — Posted Sept. 12, 2011

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An estimated 100,000 physicians and other health professionals at risk for being hit with Medicare electronic prescribing program penalties next year have until Nov. 1 to report a hardship exemption and give the Medicare agency a reason why they should not have their pay reduced in 2012.

The Centers for Medicare & Medicaid Services will give physicians a second chance to use an expanded list of exemptions to avoid a pay decrease of 1% in 2012 for not meeting e-prescribing requirements earlier this year, the Medicare agency announced in an Aug. 31 final rule. The rule gives physicians an extra month to obtain waivers compared with a rule proposed earlier this year, but it does not give physicians the additional chance to report e-prescribing measures for 2011 that the American Medical Association had requested.

The other roughly 100,000 physicians and others who successfully reported prescribing medicine electronically for their patients during eligible services -- such as new and established patient office visits -- at least 10 times between Jan. 1 and June 30 will not be penalized and won't need to apply for an exemption. Doctors who reported one of the initial hardship exemptions created by CMS -- for those working in areas without high-speed Internet access or pharmacies accepting e-prescriptions -- also will not be penalized.

In addition, physicians who achieved the minimum requirement and also reported that they sent at least 25 e-prescriptions in all of 2011 will earn a bonus equal to 1% of their Medicare charges -- but that incentive won't be paid out until later in 2012.

The AMA said the CMS final rule acknowledges physicians who could not meet all the program requirements between Jan. 1 and June 30. But Cecil B. Wilson, MD, AMA immediate past president, said the agency did not go far enough.

"We are pleased that CMS has provided more flexibility under the exemption categories and that they have extended the deadline for physicians to apply for an exemption until Nov. 1," Dr. Wilson said. "However, we had hoped for even greater flexibility, including an additional reporting period. We remain concerned that physicians will be hit with a penalty and are not being given enough time to comply with the e-prescribing program criteria to avoid this penalty."

The AMA also still has concerns that physicians have only a short time to apply for an exemption. On Sept. 8, CMS launched a special website for that purpose.

The new exemptions are available to eligible professionals who have:

  • Registered to participate in the Medicare or Medicaid electronic medical record incentive programs and adopted certified EMR technology.
  • Been unable to prescribe electronically due to local, state or federal law or regulation.
  • Had limited prescribing activity.
  • Had insufficient numbers of eligible patient visits during which to report the e-prescribing measure.

CMS attempted to be flexible, but the average doctor still faces challenges to meeting those exemption criteria, said Joseph Schneider, MD, chair of the Texas Medical Assn. health information technology committee.

The first exemption, for instance, will help physicians who already have installed EMRs or who planned to implement a system by Oct. 1, Dr. Schneider said. "But they are early adopters and are already e-prescribing. For the average doctor, who is still trying to figure out what system to buy, it doesn't help them."

The e-prescribing program also had several flaws, Dr. Schneider said. CMS had encouraged physicians to adopt paperless drug ordering technology by an artificial June 30 deadline. Instead of adopting the technology in a meaningful way, this caused some doctors to use temporary systems just to avoid the penalty and then abandon the systems.

In these cases, the electronic orders recorded by CMS are not lasting e-prescriptions, he said. For instance, electronic refill requests sent from the pharmacy to the physician would be ignored, because the physician no longer uses the technology.

Obtaining an exemption for 2012

The Medicare agency does not have the capability to notify in advance the physicians who will be penalized in 2012, CMS said. The burden lies with the individual physician or group practice.

The Medicare agency soon will provide further details on how physicians would apply for exemptions. The special waiver application website will require physicians to provide identifying information, such as a tax ID number, national provider identifier number, mailing address and email address, the final rule explained.

"It is our intention that the web-based tool be easily navigable," CMS said. "This includes indicating which fields are required for the eligible professional to complete in order to submit a complete request for a significant hardship exemption."

A physician also must include a justification statement for the hardship request. For instance, a physician requesting a significant hardship due to a lack of prescribing activity would need to disclose the number of prescriptions he or she generated during the six-month reporting period. The requests for exemptions will be considered on a case-by-case basis, CMS said.

Only individual physicians will be able to use the website. Instead, group practices will submit hardship requests in writing and mail them to the agency. Those letters must be postmarked by the Nov. 1 deadline, CMS said.

Applying future penalties

The AMA continues to oppose CMS' policy of using the previous year's e-prescribing activity to determine who should be penalized or rewarded. In the proposed Medicare physician fee schedule for next year, CMS again has proposed using early 2012 e-prescribing activity to determine if a physician should be penalized in 2013.

"We strongly believe that this would violate congressional intent and have urged CMS in a variety of forums, including a sign-on letter with 92 states and specialty societies, to create more mechanisms to assist physicians in avoiding the e-prescribing penalty," the Association said in an Aug. 29 letter to CMS on the proposed fee schedule.

CMS has proposed using a similar method for determining penalties in other incentive programs. The agency has proposed penalizing physicians in 2015 for failing to participate successfully in the physician quality reporting system during the 2013 calendar year. That penalty would reduce a physician's Medicare payments by 1.5% in 2015.

The Medical Group Management Assn. agrees that if penalties are implemented, they should reflect a physician's actions during the year to which the penalties are applied. But regardless of when they are applied, the mere act of levying the penalties on some doctors and not others could lead to another set of problems, the MGMA said in an Aug. 30 letter to CMS on the proposed fee schedule.

"The application of different Medicare allowables for individual physicians within a group practice will be an administrative nightmare," the association said. "MGMA predicts significant problems with Medicare contractors attempting to administer what will amount to customized individual Medicare fee schedules."

Associations representing physicians and other health professionals have urged CMS to apply the penalties only retrospectively. CMS uses such a strategy when it pays e-prescribing bonuses the year after the reporting period is complete.

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Avoiding the 2012 penalty

Medicare will impose a 1% payment penalty next year on physicians and others who failed to meet electronic prescribing criteria in 2011. The Centers for Medicare & Medicaid Services says the e-prescribing adjustment does not apply to:

  • A health professional who is not a physician, nurse practitioner or physician assistant as of June 30, 2011.
  • Professionals with fewer than 100 eligible patient encounters, such as new and established patient office visits, between Jan. 1 and June 30, 2011.
  • Physicians and group practices with less than 10% of their Medicare charges eligible for e-prescribing.
  • Professionals with at least 10 e-prescribing encounters reported on claims to CMS between Jan. 1 and June 30, 2011.
  • Professionals who apply for a hardship exemption by Nov. 1, 2011, and receive CMS approval.

Source: Changes to the Electronic Prescribing (eRx) Incentive Program, Federal Register, Sept. 6 (link)

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U.S. e-prescribing activity

Surescripts, which operates health information technology infrastructure, has tracked adoption and use of electronic prescribing technology in the U.S. The number of physicians who e-prescribe has grown considerably over the last decade. Key statistics for 2010:

E-prescribers: 234,000

Pharmacies set up for e-prescribing: 55,600

New e-prescriptions generated: 269 million

Prescription renewal responses: 57 million

Source: "The National Progress Report on E-Prescribing and Interoperable Healthcare for 2010," Surescripts (link)

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How to apply for a waiver

Physicians can try to qualify for one of the significant hardship waivers offered by CMS for the electronic prescribing incentive program.

Physicians reporting as individuals
Submit a waiver request online by Nov. 1
Consult the CMS manual for help

Physicians reporting as a group practice
Submit a waiver request in writing, postmarked no later than Nov. 1, to:

Significant Hardship Exemptions
Centers for Medicare & Medicaid Services
Office of Clinical Standards and Quality
Quality Measurement and Health Assessment Group
7500 Security Boulevard
Mail Stop S3-02-01
Baltimore, MD 21244-1850

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