Is Medicare Taking Care of Its Incentive Payments?


Incentive payments can help encourage certain desired behaviors, and in general they work well. However, if the payments are made improperly, the whole concept can be called into question. A recent HHS Office of Inspector General report highlighted this problem, uncovering $729 million in electronic health record incentive payments that Medicare made to physicians and hospitals who didn’t meet the program’s requirements.

The payments were made between 2011 and 2014 and were part of a program designed to promote and reward physicians and hospitals who adopted EHR systems. Medicare paid out $6 billion in EHR incentives over the audit timeframe, and has paid a total of $37 billion since the program began.

Some of the improper payments were likely due to a built-in margin of error in the EHR incentive program, Judy Waltz, a health-care attorney with Foley & Lardner LLP in San Francisco, told me. “One would assume there would be some margin of error when self-attestations were used, especially with a program for which providers didn’t have experience in what documentation would suffice,” Waltz said.

To qualify for the incentive payments, physicians and hospitals were required to prove their “meaningful use” of EHRs.

The audit's findings are likely to prompt some changes in future incentive payment programs, such as more real-time audit and review efforts beyond current CMS efforts, Katie Pawlitz, a health-care attorney with Reed Smith in Washington, told me. The CMS said it would continue to conduct targeted risk-based audits of incentive payments through the rest of 2017, according to the report.

The OIG recommended that the CMS recover the $291,222 in improper payments uncovered in the sample as well as make attempts to recover the entire $729 million.

Stay on top of new developments in health law and regulation with a free trial to the Health Law Resource Center.

Learn more about Bloomberg Law and sign up for a free trial.