Penalties for Non-Adoption of EHR Incentive Program

On September 8th, the President introduced the American Jobs Act. The Act is designed to create jobs without adding the cost to the deficit. The Act and the details on how this will be paid for are outlined in the Living Within Our Means and Investing in the Future, The President’s Plan for Economic Growth and Deficit Reduction document from the Office of Management and Budget. The plan realizes more than $3 trillion in net deficit reduction over the next 10 years. Adding the $1 trillion projected savings from the Control Act this would be a combined total of $4 trillion in deficit reduction over the next decade which is the point of fiscal balance. The overall budget spending will not add to the debt.

The plan calls for cutting $5 billion worth of waste, fraud and abuse in Medicare over 10 years. In the provisions one includes using the penalties that will be collected in 2015 from Eligible Professionals and hospitals that have not yet adopted electronic health records.

Dedicate penalties for failure to use electronic health records toward deficit reduction. Current law offers incentive payments to hospitals and physicians who become meaningful users of electronic health records. Beginning in 2015, Medicare providers that fail to become meaningful users are subject to a penalty, and the penalty is credited to a special account beginning in 2020.This proposal would instead use these penalties for deficit reduction beginning in 2021; this will save approximately $500 million over 10 years.

Remember that in the CMS Medicare EHR Incentive program, eligible professionals who do not successfully demonstrate meaningful use will have a payment adjustment to their Medicare reimbursement. The payment reduction starts at 1% and increases each year that a Medicare eligible professional does not demonstrate meaningful use, to a maximum of 5%.