Payment Adjustments & Hardship Exceptions

Avoiding Medicare Claims Reduction Penalties

Payment Adjustments

In the American Recovery and Reinvestment Act of 2009 (ARRA), Congress mandated that payment adjustments should be applied to Medicare eligible professionals and eligible hospitals who are not meaningful users of Certified Electronic Health Record (EHR) Technology under the Medicare EHR Incentive Program.

If a provider is eligible to participate in the Medicare EHR Incentive Program, they must demonstrate meaningful use to avoid a payment adjustment in either the Medicare EHR Incentive Program or in the Medicaid EHR Incentive Program, depending on their eligibility. Medicaid providers who are only eligible to participate in the Medicaid EHR Incentive Program are not subject to these payment adjustments.
These payment adjustments will be applied beginning on October 1, 2014 for hospitals and on January 1, 2015 for Medicare eligible professionals.

Hardship Exceptions

Eligible professionals and eligible hospitals may be exempt from payment adjustments if they can show that demonstrating meaningful use would result in a significant hardship. To be considered for an exception, an eligible professional or eligible hospital must complete a Hardship Exception application along with proof of the hardship. If approved, the hardship exception is valid for 1 payment year only. A new application must be submitted if the hardship continues for the following payment year. In no case may a provider be granted an exception for more than 5 years.

Eligible professionals can use the Hardship Exception Tool to determine if they will avoid the upcoming 2015 and 2016 Medicare EHR Incentive Program payment adjustments by demonstrating meaningful use, or if they should apply for a hardship exception.
Eligible Professional (EP) Hardship Exception Application

  • 2015 Eligible Professional Hardship application deadline was July 1, 2014
  • 2016 Eligible Professional Hardship application will be available soon.

Eligible Hospitals Hardship Exception Application

  • 2015 Eligible Hospital Hardship application deadline was April 1, 2014
  • 2016 Eligible Hospital Hardship application will be available soon.

Not All Providers Apply for Hardship Exceptions
Some providers will automatically be granted a hardship exception for 2015. CMS will use Medicare data on these providers to determine their hardship exception.

The following providers do not need to submit a hardship application:

  • New providers in their first year (both eligible professionals and eligible hospitals)
  • Eligible professionals who are hospital-based: a provider is considered hospital-based if he or she provides more than 90% of their covered professional services in either an inpatient (Place of Service 21) or emergency department (Place of Service 23) of a hospital*
  • Eligible professionals in which 90% of their claims include Place of Service 21, Place of Service 23 and certain observation services using Place of Service 22.
  • Eligible professionals with certain PECOS specialties (05-Anesthesiology, 22-Pathology, 30-Diagnostic Radiology, 36-Nuclear Medicine, 94-Interventional Radiology). Eligible professionals should verify that their PECOS specialty is up to date.

*Please register in the CMS Registration & Attestation System to determine hospital-based status.