Skip to main content

How to Avoid PQRS Penalties (2% of Medicare Annual Revenue!)

July 3, 2014

tips to avoid pqrs penaltiesAlthough the physician and medical community is underwhelmed, sometimes openly hostile, to the implementation of the penalty phase of the Physician Quality Reporting System (PQRS) made a permanent regulation under The Medicare Improvement for Patients and Providers Act of 2008, penalties will take effect in 2015. Penalties will apply for non-compliance for activities during the period January 1 through December 31, 2013.

Therefore, practices should implement action plans to avoid 2015 PQRS penalties NOW. CMS believes their 2013 reporting options give eligible providers sufficient time and choices to comply with PQRS requirements.

PQRS Penalties

Medical providers who do not comply with PQRS requirements can have their Medicare and Medicaid reimbursements reduced by 1.5 percent. Since CMS reimbursements are “conservative” (polite designation) already, receiving only 98.5 percent of scheduled payments could partially cripple a practice’s revenue stream.

PQRS penalties will increase to 2 percent payment reductions in 2016 for those providers that continue to operate in non-compliance. CMS, in a classic government-generated language softener, refers to these penalties as “payment modifiers,” not income penalties. The resulting revenue damage, however, achieves the same negative result.

Avoiding PQRS Penalties (or “Payment Modifiers”)

Yes, it’s getting late; but it’s not too late to avoid 2015 PQRS penalties and definitely sufficient time to avoid the heavier 2016 penalty cost potential. Since it’s late 2013, most of your previous options have disappeared per the calendar. But, you still have the following options for 2013 and 2014.

  • Start using PQRS codes immediately.
  • Learn and use PQRS measure specifications for all future Medicare patients.
  • Before the end of February 2014, use a data registry and ensure that you provide PQRS-compliant care.
  • Ensure your billing staff or third-party medical billing service is using PQRS codes for Medicare reimbursable procedures, diagnosis and treatment.
  • Use the CMS “calculated administrative claims-based reporting mechanism.”

While the CMS incentive program is important to increase your revenue, the penalty phase is even more vital to keeping your revenue stream healthy. Avoiding PQRS penalties, by taking these precautions, will serve the same–or more important–purpose.

Medical providers are busy. Billing staffs are busy. However, CMS offers multiple measures for compliant PQRS reporting. If your practice encompasses many Medicare or Medicaid patients, you need not incur PQRS penalties.

Adopting some measures as soon as possible–today is good–will avoid revenue-damaging penalties. Among the options to avoid PQRS penalties you can take are the following actions.

  • Initiate claims-based reporting, as defined by CMS procedures (using “G” codes).
  • Use registry-based reporting with CMS approved registries.
  • Implement electronic health records (EHR) reporting.

These reporting systems will help you avoid PQRS penalties, as you will have evidence that you have used CMS approved reporting systems. Using proper PQRS codes and CMS reporting methods help you avoid damaging penalties that will reduce your income.

Preparing and taking avoidance actions now is imperative. Be aware that CMS changed its definitions of individual and group medical practices. Originally, group practices included those with 25 or more eligible providers. Now practices that include only 2 or more eligible providers qualify as “group practices.” If your practice includes as few as 2 physician and non-physician providers or as many as 99, you have a CMS-defined group practice.

Don’t wait any longer, if your practice accepts Medicare or Medicaid insurance. While the incentives for complying with PQRS are beneficial, the potential penalties are damaging. Avoiding these penalties is well worth the compliance and submitting claims that satisfy PQRS regulations.

M-Scribe helps practices in choosing specialty specific measures, registry and in submission to CMS.

Image courtesy of

Get the Latest RCM News Delivered

Receive practical tips on medical billing and breaking news on RCM in your inbox.

Get in Touch