2013: A Critical Year for Medicare Incentive Programs

Amid all the recent attention given to the long-awaited modifications to HIPAA under the HITECH Act published earlier this year, it may be easy for Medicare providers to overlook the fact that 2013 is an important year for three Medicare payment incentive programs:  (1) the Physician Quality Reporting System Program; (2) the Electronic Prescribing Program; and (3) the Medicare Electronic Health Record Incentive Program.  As discussed below, there are important milestones and deadlines in 2013 for each of these programs associated with either receiving incentive payments or avoiding payment adjustments.

Physician Quality Reporting System (PQRS) Program

The PQRS Program is intended to promote the reporting of quality information by eligible professionals (EPs).  The incentives and payment adjustments for the PQRS program are based on whether an EP satisfactorily reports data on program-specified quality measures for covered physician fee schedule (PFS) services furnished to Medicare Part B fee-for-service (FFS) beneficiaries.  EPs can qualify to receive an incentive based on the 2013 reporting year (i.e. January 1, 2013 – December 31, 2013) equal to 0.5% of an EP’s total estimated Medicare PFS allowed charges for the 2013 reporting period.

The 2013 reporting year is also a critical year for the PQRS program because it is the first reporting year that will be used to apply the program’s payment adjustments.  Although the payment adjustments do not begin until 2015, the adjustments are based on information reported in the two-year “look back” reporting period, i.e., the 2013 reporting year for the 2015 payment adjustments, the 2014 reporting period for the 2016 payment adjustments, etc.  To avoid the payment adjustment for a particular year, an EP must satisfactorily report data in the applicable reporting period.  CMS will penalize EPs for failing to participate in the PQRS program in 2013 by reducing the 2015 Medicare PFS allowed charges by 1.5%.

Furthermore, one way an EP practicing in a group practice can report data for the PQRS program is through the group practice reporting option (GPRO).  Under the GPRO, a group practice may make PQRS reports for all individual EPs in the same group practice.  The deadline for a group practice to elect to report using the GPRO is October 15, 2013.

Electronic Prescribing (eRx) Incentive Program

The eRx Incentive Program is intended to encourage electronic prescribing by EPs.  2013 is the last year that EPs who are successful e-prescribers can qualify to earn an incentive payment.  The incentive payment for 2013 is equal to 0.5% percent of an EP’s total estimated Medicare PFS allowed charges for the 2013 reporting period (i.e., January 1, 2013 – December 31, 2013).  At the same time, the 2013 six-month reporting period from January 1, 2013 – June 30, 2013 is the final reporting period to avoid the 2014 eRx payment adjustment.  The 2014 payment adjustment for EPs who are not successful e-prescribers is equal to 2.0% of the EP’s Medicare PFS allowed charges.  An EP may be exempt from the 2014 eRx payment adjustment if the EP meets one of the payment adjustment exclusion criteria or the EP requests and CMS approves a hardship exemption.  An EP must qualify for one of the 2014 payment adjustment exclusion criteria or submit a hardship exemption request to CMS by June 30, 2013 to avoid the 2014 payment adjustment.

Medicare EHR Incentive Program

This program is intended to encourage Medicare EPs, hospitals and critical access hospitals to achieve “meaningful use” of certified EHR technology.  Payment adjustments for the Medicare EHR Incentive Program begin in 2015.  However, because of the two-year “look back” period adopted by CMS for the adjustments, EPs must demonstrate “meaningful use” in 2013 to avoid payment adjustment in 2015.  EPs who first demonstrate meaningful use in 2013 must demonstrate meaningful use for a 90-day reporting period in 2013 to avoid payment adjustments in 2015.  This means that October 3, 2013 is the last day for EPs who are demonstrating meaningful use for the first time to begin their 90-day reporting period.  EPs who first demonstrated meaningful use in 2011 or 2012 must demonstrate meaningful use for the full year in 2013 to avoid the 2015 payment adjustments.  The payment adjustment amount for 2015 is 1% of the EP’s PFS allowed charges for services furnished by the EP in 2015.

Summary of Key 2013 Dates:

June 30, 2013:

  • eRX: End of the 2013 six-month reporting period to avoid the 2014 payment adjustment
  • eRx: Last day for an EP to submit hardship exemption request to CMS to avoid the 2014 payment adjustment

October 3, 2013:

  • Medicare EHR: Last day for EPs to begin 90-day reporting period for Medicare EHR incentive (if 2013 is the EP’s first year of program participation)

October 15, 2013:

  • PQRS:  Deadline for group practices to submit self-nomination statement for group reporting option for PQRS program
  • PQRS:  Last day for EPs to elect the administrative claims option to avoid the 2015 PQRS payment adjustment

December 31, 2013:

  • PQRS:  End of period to avoid the 2015 PQRS payment adjustment
  • PQRS, eRx, Medicare EHR:  Participation year ends for all programs

In sum, Medicare providers should take note of the above dates related to the PQRS, eRx and Medicare EHR Incentive Programs, especially those dates associated with actions which they will need to take or achieve in order to avoid the applicable program payment adjustments beginning in 2015.

For more information about the Medicare incentive programs discussed above, please contact Lee Kuo.



  1. Joe Bateman MD says:

    Do the penalties/incentives calculation for these programs use just traditional Medicare charges or does the calculation also include Medicare Advantage?

    • Elana Zana says:

      For PQRS the penalties/incentives apply to EPs charges under the Medicare Physician Fee Schedule only. There is a separate Medicare Advantage program for the EHR Incentive Program.

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