Health care providers today face an overwhelming number of change initiatives that aim to move the provider community in a given direction by leveraging incentives and penalties. Learn about all of the incentives and penalties CMS is leveraging to drive health care reform.

1. CMS Incentives & Penalties:
An Overview of the Carrots &
Sticks of Health Reform

2. Health care providers today face an
overwhelming number of change
initiatives that aim to move the provider
community in a given direction by
leveraging incentives and penalties—
otherwise known as "carrots and sticks."

3. Many of the CMS program penalties are
cumulative, meaning providers who fail
to meet the requirements for PQRS
reporting, e-Prescribing, Meaningful Use
and other programs will be subject to all
amassed payment adjustments.

4. CMS Incentives & Penalties
Program 2012 2013 2014 2015 2016 2017
Medicare e- Carrots
Prescribing 1.0% 0.5%
Incentive Program*
Sticks
-1.0% -1.5% -2.0%
Medicaid EHR Carrots
Incentive Program Year 1: $21,250 Year 1: $21,250 Year 1: $21,250 Year 1: $21,250 Year 1: $21,250 Year 1: $21,250
Years 2-6: Years 2-6: Years 2-6: Years 2-6: Years 2-6: Years 2-6:
$8,500 $8,500 $8,500 $8,500 $8,500 $8,500
Medicare EHR Carrots
Incentive Program Up to $18,000 Up to $15,000 Up to $12,000 Up to $8,000 Up to $4,000
Sticks
-1.0% -2.0% -3.0%
ICD-10 Changeover Carrots Sticks
None None No $ No $ No $ No $
CMS Physician Carrots Sticks
Quality Reporting 0.5% 0.5% 0.5% -1.5% -2.0% -2.0%
System
CMS Value-Based Carrots Carrots/Sticks
Modifiers None None None +/- TBD +/- TBD +/- TBD

5. Medicare e-Prescribing
Incentive Program
Program 2012 2013 2014 2015 2016 2017
Medicare Carrots
e-Prescribing 1.0% 0.5%
Incentive Program*
Sticks
- -1.5% -2.0%
1.0%

6. Medicare e-Prescribing
Incentive Program
Incentives:
• Reporting period: Jan. 1 - Dec. 31,
2012 (no sign-up required)
• Three ways to report: claims,
registry or EHR Direct
• Claims-based Reporting: HCPCS
Code G8553 on 25 unique visits

7. Medicare e-Prescribing
Incentive Program
Penalties:
• Reporting Period: Jan. 1 – June 30,
2012
• Claims-based Reporting: Must
report HCPCS code G8553 on 10
unique visits by 7.27.2012 to avoid
the penalty

8. Medicare EHR
Incentive Program
Program 2012 2013 2014 2015 2016 2017
Medicare EHR Carrots
Incentive Program Up to Up to Up to Up to Up to
$18,000 $15,000 $12,000 $8,000 $4,000
Sticks
-1.0% -2.0% -3.0%
** Meaningful Use incentives will vary based upon the EP’s year initiated and
allowable charges.

9. Medicare EHR
Incentive Program
• Eligible Provider Types - MD, DO,
DDS, DMD, DPM, OD, DC
• Must have PECOS Number with
CMS
• Must register with CMS at
cms.gov/EHRIncentivePrograms/

10. Medicare EHR
Incentive Program
• Year 1: 15 Core + 5 Menu
Objectives/Measures for continuous
90 days
• Year 2 and Beyond: Full Year of
Meaningful Use

11. Medicaid EHR Incentive
Program
Program 2012 2013 2014 2015 2016 2017
Medicaid Carrots
EHR Year 1: Year 1: Year 1: Year 1: Year 1: Year 1:
Incentive $21,250 $21,250 $21,250 $21,250 $21,250 $21,250
Program Years 2- Years 2- Years 2- Years 2- Years 2- Years 2-
6: 6: 6: 6: 6: 6:
$8,500 $8,500 $8,500 $8,500 $8,500 $8,500

12. Medicaid EHR Incentive
Program
• Year 1: Adopt, Implement or
Upgrade Certified EHR
• Year 2: Demonstrate Meaningful
Use for 90 continuous days
• Years 3 through 6: Demonstrate
Meaningful Use for full year

13. The ICD-10 Changeover
Program 2012 2013 2014 2015 2016 2017
ICD-10 Carrots Sticks
Changeover None None No $ No $ No $ No $

14. The ICD-10 Changeover
• Effective Date: Oct. 1, 2013; NPRM
pending for delay to Oct. 1, 2014
• Transition requires maintenance of
both ICD-9 and ICD-10:
o DOS < Oct. 1, 2014 → ICD-9
o DOS = Oct. 1, 2014 or > → ICD-10

15. The ICD-10 Changeover
• CMS and other payers cannot process
ICD-10 claims before Oct.1, 2014
• Applies to all payers and providers
• Does not affect CPT coding

16. CMS Physician Quality
Reporting System
Program 2012 2013 2014 2015 2016 2017
CMS Physician Carrots Sticks
Quality Reporting 0.5% 0.5% 0.5% -1.5% -2.0% -2.0%
System

17. CMS Physician Quality
Reporting System
$1,000
• Penalties begin in 2015, but are
based on participation in 2013
• Three ways to report: claims, registry
or EHR Direct
• Eligible Professionals include those
who provide services paid based on
the Medicare PFS

18. CMS Value-Based Modifier
Payment Program
Program 2012 2013 2014 2015 2016 2017
CMS Value- Carrots Carrots/Sticks
Based None None None +/- TBD +/- TBD +/- TBD
Modifiers

19. CMS Value-Based Modifier
Payment Program
• VBM will compensate physicians
differentially based upon a
composition of quality and costs.
• Physician performance will be
measured by clinical data reported
through PQRS between 2015 and
2017

20. CMS Value-Based Modifier
Payment Program
• The VBM applied will be -1 percent in
CY2015 for groups of more than 25
physicians that do not participate in
PQRS in CY2013, which is the
performance period for the initial
VBM.

21. Want more details on
each program?
• e-Prescribing Incentive Program
• EHR Incentive Programs
• Physician Quality Reporting System
• ICD-10
• CMS Value-Based Payment Modifier

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