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Our Changing World: Reimbursement 2014

The evolution of how providers will be paid continues its metamorphosis in 2014 and is gaining traction.  While having to deal with the recurring issue of SGR payment reductions, practices must also contend with the quality payment aspects that portend to be part of future reimbursement models.


Medicare is at the forefront of this change. Legislators and providers alike are struggling with how to move forward. Faced with an impending 20% reduction based on the SGR (sustainable growth rate) aspect of the current fee-for-service formula, Congress punted again.  A temporary fix for the SGR Medicare payment reduction was enacted on December 26, 2014.  The cut was replaced with a .5% increase.  However, this is only effective through March of 2014.  The intent was to give Congress a little more time to develop a permanent solution to the SGR problem.  Unfortunately, the passage of this legislation was also tied to the Ryan-Murray budget deal, which extended the sequestration cuts to Medicare through 2023.  The net effect is a little over a 1% reduction in payments.


In looking at  Medicare payments, most of the focus has been on the Conversion Factor associated with Medicare reimbursement.  That is the part of the payment formula that the SGR influences.  However, there are  Relative Value Units (RVU’s) associated with each CPT code that also affect payments.  These RVU’s are comprised of geographic cost factors, practice expenses, and the cost of malpractice insurance, each of which can fluctuate.  CMS reviews these annually, frequently making adjustments.  Depending on what CMS changes, the effect often varies among specialties.  For example, this year, the largest gains from RVU changes are for Chiropractors, Psychologists, and Clinical Social Workers.  Those specialties with the greatest loss are Diagnostic Testing Facilities, Pathology, Independent Labs, and Rheumatology.


While contending with reimbursement changes in Medicare’s fee-for-service model, providers are experiencing the prodding of CMS to begin looking at reimbursement from a different perspective, a result-driven or case management focus.  CMS wants providers to focus more on quality and less on just providing a service.  This can be illustrated by the move to reimburse providers for Care Coordination beginning in 2015.  Currently there are legislators indicating legislation may be introduced that provides a global payment for care of a chronic illness for a patient rather than paying for the individual services provided in the treatment of the illness.


CMS is also encouraging providers to utilize electronic health records and to measure performance based upon what it deems the standard of care should be for the treatment of a patient’s diagnosed problem.  This is reflected in the incentives and adjustments (i.e. penalties), associated with the implementation of electronic health records and PQRS (Physician Quality Reporting System) requirements.  The incentives are going away.  2014 is the last year a provider can qualify under Medicare criteria and receive incentive payments for implementation of an Electronic Health Record system.  This year will also be the last year for some PQRS incentive payments.  However, next year, 2015, will be the year providers will begin experiencing increased negative adjustments.


In addition to the 2% sequestration adjustment, an e-Rx penalty of 2% for not meeting requirements associated with electronically ordering prescriptions will be imposed.  Although this is the last year for the e-Rx penalty, 2015 will see penalties for failure to meet PQRS reporting requirements begin.  2015 will also see penalties for not meeting Meaningful Use requirements.  This will initially be a -1.5% adjustment for next year and increase to -2.0% for subsequent years.  Providers will also see the introduction of the VBM (value based modifier) in 2015 for clinics of 100 or more providers.  This penalty will apply to clinics of 10 or more in 2016 and to every provider in 2017.


It is important to understand that these adjustments are based on activity in prior periods.  For example, a PQRS adjustment applied to Medicare payments in 2015 is based on 2013 reporting activity.  So, to prevent future adjustments, steps must be taken now.  If a provider failed to meet requirements for PQRS participation, failed to implement an electronic health record system to meet meaningful use requirements, and did not meet VBM requirements, the provider could experience a 3.5% reduction in Medicare reimbursement.  Adding the impact of sequestration reductions, the total adjustments may be -5.5%.  Adjustments will increase over the next few years and may be as much as -11%.


Also on the horizon is the dreaded October 1, 2014 ICD-10 implementation date.  Most practices have been inundated with information on this topic to the point of becoming numb.  However, all indications are consistent that Medicare will not delay this implementation date.  Be prepared.  Providers should begin now examining the services they provide and develop a plan to learn how to code under the new guidelines.  Coding personnel in the practice need training.  The organizations providing the clinic’s EHR, Practice Management System, and Clearinghouse services should be monitored, and, if necessary, pushed to test and be compliant before the deadline.  And, the practice should build up cash reserves and/or establish a line of credit in anticipation that reimbursement delays are likely to arise.


Like recent years, 2014 portends to be an active one.  The SGR  issue is still unresolved and will need to be handled by March 31, 2014 to avoid payment hassles.  Practices will begin seeing patients enrolled in insurance plans through the Insurance Exchange or Marketplace, which will create its own set of problems.  The 2014 legislative session will see the introduction of “any willing provider” legislation.  The intent of this legislation is to prevent an insurance company from denying  a provider’s participation in a network if the provider meets the requirements for network participation.  Obviously, practice administrators must stay actively involved and informed to maintain a healthy revenue cycle.



Avoiding Medicare Penalties in 2015


Physician Quality Reporting System PQRS 2013

 Harold Ingram


CMS (The Centers for Medicare and Medicaid Services) created several quality initiatives intended to provide quality of care information for a variety of providers, in a number of different settings.  The rationale offered is that this information will be beneficial in empowering patients and will support new payment models that include quality of care measures in determining reimbursement.

The Tax Relief and Health Care Act of 2006 initiated this process by implementing the Physician Quality Reporting Initiative PQRI, which is now referred to as the Physician Quality Reporting System or PQRS.  As with some earlier health care related legislation, the passage of the Affordable Care Act (ACA) modified the PQRS program.  For the past several years, CMS has encouraged physicians to participate by offering incentives, the carrot.  However, beginning this year, 2013, CMS is bringing out the stick.  If physicians fail to participate in PQRS by reporting on services provided in 2013, a payment adjustment of -1.5% will be applied to all Medicare payments in 2015.  However, successful participation in the program will avoid the penalty. As an additional benefit, successful participation will also give the provider a .5% incentive payment or bonus for 2013.

If CMS determines that  a physician or group did not successfully participate through a qualified reporting option for 2013, Medicare payments for 2015 will be 98.5% of the Medicare allowable for the services provided.  As specified in the 2012 Medicare Fee Schedule, there are multiple ways to report PQRS activity.  These include (1) Claims-Based Reporting, (2) Registry-Based Reporting, (3) EHR-Based Reporting, and (4) Group Practice Reporting.  Information on the reporting methods are available on the CMS website.

At this point, the easiest way for a physician to report is through a qualified Registry.  A Registry is an organization that has met CMS requirements allowing it to report PQRS information on behalf of a provider.  If registry reporting is the selected reporting method, there are two options. One is through Individual Measures. The other is through measures groups.

Individual Measures registry reporting requires the physician to select at least 3 individual measures from a list of CMS approved measures.  For 2013, 138 individual measures were approved.  If this method is selected, the provider must report on at least 80% of the Medicare Part B fee for service patients seen in 2013.

Measures Groups registry reporting is probably going to be the easiest way to report.  It provides for two reporting periods, January 1, 2013 through December 31, 2013 or July 1, 2013 through December 31, 2013.  It will require the selection of at least one measures group.  And, the physician will have to report on at least 20 patients.  A minimum of 11 of these patients will have to be Medicare Part B patients.

To obtain additional information on PQRS, the reporting requirements, and the measures that may be selected, go to the CMS website and search for PQRS measures.  Twenty-two (22) measures groups were approved for 2013.  One frequently selected is the Diabetes Measures Group.

To get an idea of what is required to report on a measures group, MDinteractive has a brief tutorial for its registry at that demonstrates the information needed for reporting purposes.  The cost for using a registry is generally between $200 and $300.

There are a number of organizations authorized to submit information on the behalf of physicians.  These Registries will provide guidance and assistance in collecting, qualifying, and reporting PQRS data.  Many specialty groups or societies offer this service to their members.  Some Registry websites that you may wish to visit for further reporting information are:





This type of reporting is just a pre-cursor to the requirements physicians will face for future reimbursement.  PQRS reporting is currently a Medicare requirement that provides a limited assessment of the quality of care provided.  However, as payment models change, there will be more emphasis on measuring quality, like PQRS, as well as measuring the expense associated with treating patients.  Expect these new models to apply to all insurance carriers, Medicare, Medicaid and commercial.