Avoiding the 2012 eRx Penalty: Christmas in September?

Last month I reviewed a proposal by CMS to limit the impact of the 2012 eRx “adjustment.” On August 31, CMS published the final rule entitled “Changes to the Electronic Prescribing (eRx) Incentive Program.” At 72 double-spaced pages, reading this one is a chip shot. Today I will walk through the highlights and examine the impact upon the practice of nephrology.


First, to reiterate what brought us to the brink so to speak: To date the eRx Incentive Program has operated as a pay-for-reporting program, with CMS paying financial incentives to successful e-prescribers. Published data suggests that in years past this has been an attractive program for nephrologists who qualify. The latest data available dates to CY 2009 when the incentive was 2% of the provider’s Medicare Part B allowable. Nephrologists successfully participating that year received an average incentive of just under $5,300.


As the saying goes, all good things must come to an end, and indeed the value of the eRx incentive is declining. Note in the table below, not only is the incentive on the decline, but next year heralds the arrival of the “adjustment” or penalty phase of the program.
















The “snake in the grass” relates to the means by which CMS identifies whom to penalize in 2012. In effect, the program surveys provider activity during the “2012 eRx Adjustment Period” which was the first six months of this year. In order to avoid the 1% haircut on your total 2012 Medicare Part B Allowable, one of the following must have occurred between Jan 1 and June 30, 2011:

  • You reported the eRx G-code on 10 eligible claims (i.e., you were a successful e-prescriber).
  • You had fewer than 100 claims for patient services that contained a CPT code in the measures denominator. (For the typical nephrologist this basically states you had fewer than 100 encounters in the office with Medicare Part B beneficiaries during the first six months of 2011.)
  • Less than 10% of your estimated total Part B allowable was composed of services that appear in the measures denominator.

In addition to these opportunities to avoid the 2012 penalty, CMS created two hardship exemptions. These exemptions will be reviewed on a case-by-case basis and both required the provider to submit a G-code on a claim during the first six months of the 2011. The hardships were:

  • You practice in a rural area with limited high speed internet access.
  • You practice in an area with limited available pharmacies for electronic prescribing.

So what presents has CMS now put under the tree? Essentially they have done a couple of things. First and most importantly they have reopened the window for providers attempting to avoid the penalty. Providers now have until November 1, 2011, to apply for an exemption from the 2012 penalty. The two existing hardships above remain in play and are included within the extended window. In addition, CMS has added several other hardship exemptions including:

  1. Eligible professionals who register to participate in the Medicare EHR Incentive Program and adopt Certified EHR Technology.
  2. Inability to electronically prescribe due to local, State, or Federal law or regulation (typically providers whose practice entails prescribing a large volume of narcotics).
  3. Limited prescribing activity (for example, an NP who may not write scripts using his or her NPI or a provider who wrote fewer than 10 scripts during the first six months of 2011).
  4. Insufficient opportunities to report the eRx measure due to limitations of the measures denominator.

Among these new hardships, I think numbers 1 and 4 above have the greatest potential to impact nephrologists. With regards to number 1, quoting the final rule:


“In requesting a significant hardship exemption category under this category, an eligible professional is attesting that he or she either has purchased the specified Certified EHR Technology (as identified by the CMS ID) or has the specified Certified EHR Technology (as identified by the CMS ID) available for immediate use and that the eligible professional intends to use that Certified EHR Technology to qualify for a Medicare or Medicaid EHR incentive for payment year 2011 ‘CMS EHR Certification ID’ for the Certified EHR Technology which can be generated through the CHPL website maintained by ONC.”


Basically, if you have purchased or installed a certified EHR and intend to use that EHR to demonstrate meaningful use in 2011 you may be considered for this exemption from the 2012 eRx penalty.


The fourth hardship exemption above may apply to a handful of nephrologists. The example CMS sites is the surgeon who, in spite of having 100 denominator eligible visits (again, largely office encounters) during the first six months of the year, did not have the opportunity to prescribe a medication during ten of these encounters. In rare circumstances there may be nephrologists who face the same challenge; they had over 100 eligible encounters with Part B beneficiaries, but did not have prescribing opportunities during ten of those encounters.


The final rule states that requests for one of the hardship exemptions identified above will be submitted via a Web-based tool. The details regarding this submission method are to be posted on the CMS eRx Incentive Program website. I have searched the site high and low and the instructions must be forthcoming as they are not visible today to my eye. Note that all requests for a hardship exemption from the 2012 eRx payment adjustment will be reviewed on a case-by-case basis. Finally, as noted above, all requests must be submitted by November 1, 2011.


What are the take ways for nephrologists? From my perspective there are a few.


First, if you have successfully demonstrated meaningful use, or you are willing to attest to the fact that you will do so this year, I would submit the appropriate hardship exemption identified above. I would do this even if I were confident I had put a G-code on 10 eligible claims during the first six months of 2011. Odd things can happen to a claim between the time it leaves your hands and it reaches CMS. I would look at this as insurance against next year’s penalty. Why risk a 1% haircut on your Medicare Part B book of business?


Second, take a close look at the other exemptions. Did you have over 100 office based encounters with Medicare Part B beneficiaries during the first six months of the year, but did not have an opportunity to write a script during at least 10 of them? An unlikely circumstance, but if you find yourself in this situation, request the appropriate hardship exemption. No one would mistake CMS for Santa Claus, but for some of you this may indeed be a case of Christmas in September.

5 Responses to “Avoiding the 2012 eRx Penalty: Christmas in September?”

  1. Good morning Dr. Ketchersid,

    In reading your article for the 2012 ePrescribing Penalty, you reference filing for a hardship exemption between Jan 1 and June 30, 2011.

    Question: What about the e-prescribing requirement between July 1 and December 31? Is there any hardship exemption in the event one of the nephrologists does not meet the next 15 prescriptions for that time period?

    Thanks for your help!

    1. Good question Christine. There is actually nothing specific about the second half of this year. The entire year (2011) is considered to be the 2013 eRx adjustment reporting period. In order to avoid the 2013 penalty, a provider must either put the eRx G-code on 25 eligible Medicare Part B claims during 2011 or submit 25 instances via a qualified PQRS Registry that offers eRx reporting. As of today those are the only ways to avoid the 2013 penalty.

      Having said that, the proposed rule for the 2012 physician fee schedule contains additional relief including:

      1) Establishing the first 6 months of 2012 as another 2013 adjustment reporting period. The expectation is one could either submit the G-code on 10 claims during that period of time or send 10 instances in via a PQRS Registry.

      2) A proposal that states if the provider was ever a successful e-prescriber they would forever be exempt from the penalty.

      3) The possiblity that the 10 scripts the provider sends electronically in the first half of 2012 could occur anywhere (dialysis, hospital, etc). That is avoiding the penalty would not require an encounter in the office.

      Again let me emphasize today these are proposed. We will know more late this year when the 2012 PFS is final.

  2. Many thanks to blog reader Christine Krejcar for reaching out to CMS and locating the hardship exemption request page.

    Per CMS the hardship exemption request page is now available at the following location:


    Each eligible professional that wants to submit a hardship exemption has to submit the request individually, requesting for a group is not possible.

    Once you get to the site you will click on the “Communication Support Page” in the upper left hand corner of the screen. You will see the form to complete and submit. Also on the bottom right of that form that comes up is a “Help” link and a “?” link. By selecting one of those links you will be able to view the User Guide which provides all of the instructions needed to submit the hardship that applies to your practice.

    Thank you Christine.

  3. I tried the link above and it comes back a bad link….Any ideas?

    1. Hello Angela, I am able to access the link today without difficulty, although Chris did mention in her email that CMS was working on an internal issue related to their inability to handle the required character string in the EHR Certification number. Unclear at this jucture when those issues will be resolved.

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