EHR Incentive Money and Sequestration Update

At HIMSS, the news was tweeted out about the impact of Sequestration on Meaningful Use and EHR incentive money. I’d seen little other details about the impact of sequestration on the EHR incentive money until now. CMS just sent out the following update on the mandated sequestration.

Mandated Sequestration Payment Reductions Beginning for Medicare EHR Incentive Program

Incentive payments made through the Medicare Electronic Health Record (EHR) Incentive Program are subject to the mandatory reductions in federal spending known as sequestration, required by the Budget Control Act of 2011.

Incentive Payment Reduction
The American Taxpayer Relief Act of 2012 postponed sequestration for two months.  As required by law, President Obama issued a sequestration order on March 1, 2013. Under these mandatory reductions, Medicare EHR incentive payments made to eligible professionals and eligible hospitals will be reduced by 2%.

Reduction Timing
This 2% reduction will be applied to any Medicare EHR incentive payment for a reporting period that ends on or after April 1, 2013. If the final day of the reporting period occurs before April 1, 2013, those incentive payments will not be subject to the reduction.

Please note: This reduction does not apply to Medicaid EHR incentive payments, which are exempt from the mandatory reductions.

The 2% will be a little annoying for a doctor’s office, but the 2% off the multi-million dollar EHR incentive a hospital receives is going to add up to a pretty penny. At least the information is out there so that hospitals can plan. Although, it’s not like you can stop the EHR implementation at this point in the cycle.