How to identify PQRS penalties

March 13, 2017

Unlike other Medicare penalties, it’s not always apparent when a group is being penalized for PQRS.

Do you know how to identify whether your group’s Medicare payments are being penalized because of prior poor performance under the Physician Quality Reporting System? You may assume identifying the 2 percent PQRS penalty is as simple as locating the PQRS remark code (N699) on your Medicare remittances and matching it up with a corresponding adjustment. Unfortunately, it’s a bit more complex than that.

For whatever reason, CMS has elected to deduct the 2 percent penalty straight from your allowable amount, which means you won’t find a line adjustment that indicates your actual payment compared against the full allowable amount like you see with sequestration penalties.

One biller we work with believed that since no adjustment was shown on the remittances, the PQRS remark code was simply a warning and not an indication of a reduction. Fortunately, we were able to use Medicare’s Fee Schedule Look-Up tool to show the payment the group received was actually 2 percent lower than the full allowable!

So, other than understanding how the penalty was applied beforehand, what could the group and their biller have done to avoid this confusion? For starters, they could have paid attention when CMS informed them in the fourth quarter of 2016 that they had failed to satisfactorily report during the 2015 PQRS reporting period and would subsequently receive a 2 percent penalty on their 2017 Medicare payments (remember, PQRS penalties are applied two years after their corresponding performance year).

However, we understand these communications can be missed, which is why we help our clients build reimbursement tracking or contract management reports that allow billers to quickly identify allowable amounts from various payers. By uploading your Medicare Fee Schedule, future payments you receive can be compared against your database to ensure you’re receiving your full payment.

Remember, 2016 was the final PQRS performance year, which means 2018 will be the last time you could potentially see the 2 percent PQRS penalty. Unfortunately, penalties are only set to increase in subsequent years under the new Merit-based Incentive Payment System that combines PQRS with other quality and value reporting programs. This means those who have been ignoring quality reporting cannot afford to continue to do so.

If you’re Medicare payments are down and your biller can’t explain why, or if you’re seeking an expert to assist you and your biller with new quality reporting requirements, call Vachette Pathology today at 517-486-4262 or visit us online at We’d be happy to set up a free consultation with your group to outline exactly how we’ll ensure you avoid these penalties moving forward while also helping your practice locate money that has been slipping through the cracks.

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