August 2014 
Meaningful Use Update – Payment Adjustments
Understanding Meaningful Use Penalties
As part of the American Recovery and Reinvestment Act of 2009 (ARRA), Congress mandated payment adjustments to be applied to Medicare-eligible professionals and hospitals who are not Meaningful Users of Certified Electronic Health Record (EHR) Technology under the Medicare EHR Incentive Programs. Medicaid-eligible professionals who can only participate in the Medicaid EHR Incentive Program and do not bill Medicare are not subject to these payment adjustments.  
There are significant differences in the calculation and timing of penalties in the form of reduced Medicare re-imbursement between acute care, critical access and eligible providers. Depending upon when you first attest, penalty timeframes may vary. The Stage 2 Rule has established the timeline for how reductions in Medicare reimbursement will be calculated for EHs and EPs who fail to meet Meaningful Use requirements for a given year.  
Payment Adjustment for Medicare Subsection (d) Eligible Hospitals  
Eligible hospitals that are not Meaningful Users will be subject to a payment adjustment beginning on October 1, 2014. This payment adjustment is applicable to the percentage increase of the Inpatient Prospective Payment System (IPPS) payment rate for those eligible hospitals that are not Meaningful EHR Users. These hospitals will receive a reduced update to the IPPS standardized amount. The payment adjustment is cumulative for each year that an eligible hospital is not a Meaningful EHR User.  
Eligible hospitals that first demonstrate Meaningful Use in fiscal year 2011 or 2012 must demonstrate Meaningful Use for a full year in fiscal year 2013 to avoid payment adjustments in 2015.  
Eligible hospitals that first demonstrate Meaningful Use in fiscal year 2013 must demonstrate Meaningful Use for a 90-day reporting period in 2013 to avoid payment adjustments in 2015. They must continue to demonstrate Meaningful Use every year to avoid payment adjustments in subsequent years.  
“Depending upon when you first attest, penalty timeframes
may vary.”
 

Jim Deren
Healthcare IT Planning Specialist
CareTech Solutions

Eligible hospitals that first demonstrate Meaningful Use in fiscal year 2014 must demonstrate Meaningful Use for a 90-day reporting period in 2014 to avoid payment adjustments in 2015. This reporting period must occur in the first nine months of fiscal year 2014, and must attest to Meaningful Use no later than July 1, 2014, in order to avoid the payment adjustments. Eligible hospitals must continue to demonstrate Meaningful Use every year to avoid payment adjustments in subsequent years.
Payment Adjustment for Critical Access Hospitals  
Critical Access Hospitals (CAHs) that are not Meaningful Users will be subject to a payment adjustment for fiscal year 2015. This payment adjustment is applicable to a CAH’s Medicare reimbursement for inpatient services during the cost reporting period in which they failed to demonstrate Meaningful Use. If a CAH has not demonstrated Meaningful Use for an applicable reporting period, then for a cost reporting period that begins in FY 2015, its reimbursement would be reduced from 101 percent of its reasonable costs to 100.66 percent. For a cost reporting period beginning in FY 2016, its reimbursement would be reduced to 100.33 percent of its reasonable costs. For a cost reporting period beginning in FY 2017 and each subsequent fiscal year, its reimbursement would be reduced to 100 percent of reasonable costs.
In order to avoid the payment adjustments, CAHs must demonstrate Meaningful Use within the full federal fiscal year that is the same as the payment adjustment year. The adjustment would then apply based upon the cost reporting period that begins in the payment adjustment year (that is, FY 2015 and thereafter).
CAHs are required to submit their attestations for Meaningful Use by November 30 of the following fiscal year. For example, if a CAH is attesting that it was a Meaningful EHR User for FY 2015, the attestation must be submitted no later than November 30, 2015 in order to avoid payment adjustments.
Payment Adjustments for Medicare-Eligible Professionals
Medicare-eligible professionals who are not Meaningful Users will be subject to a payment adjustment beginning on January 1, 2015. This payment adjustment will be applied to the Medicare physician fee schedule (PFS) amount for covered professional services furnished by the eligible professional during the year. The payment adjustment is one percent per year and is cumulative for every year that an eligible professional is not a Meaningful User. Depending on the total number of Medicare eligible professionals who are Meaningful Users under the EHR incentive programs after 2018, the maximum cumulative payment adjustment can reach as high as five percent.
Eligible professionals who first demonstrate Meaningful Use in 2011 or 2012 must demonstrate Meaningful Use for a full year in 2013 to avoid payment adjustments in 2015.
Eligible professionals 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.
Because all providers must upgrade or adopt newly certified EHRs in 2014, all providers, regardless of their stage of Meaningful Use, are only required to demonstrate Meaningful Use for a three-month (or 90-day) EHR reporting period in 2014. Eligible professionals who first demonstrate Meaningful Use in 2014 must demonstrate Meaningful Use for a 90-day reporting period in 2014 to avoid payment adjustments in 2015. This reporting period must occur in the first nine months of calendar year 2014, and eligible professionals must attest to Meaningful Use no later than October 1, 2014 in order to avoid the payment adjustments.  
Eligible professionals must continue to demonstrate Meaningful Use every year to avoid payment adjustments in subsequent years.  
Upcoming Meaningful Use topic: Attestation Timelines


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