January 24, 2012 in Blog Update by Damon

ARTICLE: eRx Penalty Revealed in Fine Print of Medicare Remittances

The Centers for Medicare and Medicaid Services (CMS) had intended to inform physicians and other prescribers whether they would be subject to the penalty through a feedback report that they could access online. However, on December 29, the agency announced that “due to the high volume of significant hardship exemption requests, it is no longer technically feasible for CMS to provide a…feedback report.”

Instead, CMS encouraged prescribers to check their remittance statements for claims submitted for services rendered since January 1, 2012. If they were hit with the 1% penalty (a “payment adjustment” in CMS parlance), they would see the letters “LE” on the statement and 2 different codes. The first is Claim Adjustment Reason Code (CARC[I1]) 237, indicating a “legislated/regulatory penalty.” The second is Remittance Advice Remark Code (RARC) N545, which explains that the provider was an “unsuccessful e-prescriber” in 2010 as defined by Medicare’s e-prescribing incentive program.

If CMS penalizes a prescriber in error, it will reprocess the claims in question and return the 1% that was originally subtracted. One example of such an error that the agency cited is a penalized prescriber who requested a hardship exemption that is “ultimately approved.” That statement suggests that as of December 29, CMS might not have ruled on all the exemption requests submitted before the deadline of November 1, 2011. As of press time, Medscape Medical News had not received an answer from CMS as to how many exemption requests it has received and when it expects to finish processing them.

First Carrots, Then Sticks

The 1% penalty is part of a carrot-and-stick approach taken by the government to persuade physicians to electronically transmit scripts from their computer to a pharmacy’s computer. A 2008 law called the Medicare Improvements for Patients and Providers Act (MIPPA) authorized bonus payments for physicians who use approved e-prescribing software in the course of treating Medicare patients. The bonus in 2012 is 1% of fee-for-service (FFS) charges. It decreases to 0.5% in 2013 and vanishes in 2014.

MIPPA penalties for paper-bound prescribers, meanwhile, debuted in 2012 at 1% of FFS charges. The penalty increases to 1.5% in 2013 and 2% in 2014.

Physicians are automatically spared the penalty in 2012 — and the need for a hardship exemption — if they:

• Reported at least 10 e-prescriptions via claims in the first half of 2011;
• Reported that they lacked prescribing privileges on at least 1 eligible Medicare claim before June 30, 2011;
• Were not a licensed physician, nurse practitioner, or physician assistant as of June 30, 2011;
• Did not have at least 100 claims for patient visits involving 1 of the 56 required billing codes for the first 6 months of 2011; or
• Did not generate at least 10% of their total allowed Medicare charges in the first half of 2011 through services associated with the 56 billing codes.

All other physicians had until November 1, 2011, to apply for 1 of 6 hardship exemptions, which included practicing in a rural area that lacks high-speed Internet access and having registered to participate in the government’s program to reward “meaningful use” of electronic health records.

More information on the government’s e-prescribing incentive program is available on the CMS Web site.