Physician Value-Based Payment Modifier How will the VBM Impact Your Practice?

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1 Physician Value-Based Payment Modifier How will the VBM Impact Your Practice? What is the Value-Based Payment Modifier (VBM)? The VBM provides for differential payment to a physician or group of physicians under the Medicare Physician Fee Schedule (PFS) based upon the quality of care furnished compared to cost during a performance period. The Affordable Care Act requires that the VBM be applied to specific physicians that the HHS Secretary determines appropriate starting January 1, 2015, and to all physicians by January 1, The VBM applies only to physician payments under the Medicare PFS. Since the program is budget neutral, reductions in payments to low performing physicians will finance increases in payments to higher performing physicians. To whom will the VBM apply? Beginning in calendar year (CY) 2015, the VBM will affect Medicare payments to physicians in groups of 100 or more eligible professionals (EP) based on 2013 performance on quality and cost measures. In 2016, the modifier will apply to physicians in groups of 10 or more EPs based on 2014 performance. In 2017, the modifier will apply to all physicians based on 2015 performance. Additionally, for 2015 and 2016, the VBM does not apply to groups of physicians in which any of the group s physicians participate in the Medicare Shared Savings Program Accountable Care Organizations (ACOs), the testing of the Pioneer ACO model, or the Comprehensive Primary Care Initiative. How are physician groups defined for purposes of the VBM? Groups of physicians are defined as a single Taxpayer Identification Number (TIN) with two or more individual EPs, as identified by their individual National Provider Identifier (NPI), who have reassigned their Medicare billing rights to the TIN. The following professionals will be counted as eligible professionals for purposes of determining group practice size and VBM application. * Physicians -- Doctor of Medicine, Doctor of Osteopathy, Doctor of Podiatric Medicine, Doctor of Optometry, Doctor of Dental Surgery, Doctor of Dental Medicine, Doctor of Chiropractic Practitioners -- Physician Assistant, Nurse Practitioner, Clinical Nurse Specialist, Certified Registered Nurse Anesthetist, Certified Nurse Midwife, Clinical Social Worker, Clinical Psychologist, Registered Dietician, Nutrition Professional, Audiologists Therapists -- Physical Therapist, Occupational Therapist, Qualified Speech-Language Therapist Note: The VBM will only affect physician payments despite the inclusion of other professionals for purposes of determining group size.

2 How does Medicare determine whether a group of physicians has 10 or more eligible professionals? CMS queries Medicare s Provider Enrollment, Chain, and Ownership System (PECOS) to identify groups of physicians with 10 or more EPs at the close of the PQRS group self-nomination process during the relevant performance period year (2014). Groups of physicians are removed from the list if, based on claims analysis, the group of physicians did not have the required number of EPs that submitted claims during the performance period. How will Medicare determine the Value Modifier in CY 2015 and 2016? Each physician group receives two composite scores (quality and cost), based on the group s standardized performance (e.g. how far away from the national mean.). This approach identifies statistically significant outliers and assigns them to their respective quality and cost tiers CMS categorizes groups of physicians with 100 more EPs into two categories: Category 1 Includes physician groups that have: (a) self-nominated/registered for the Physician Quality Reporting System (PQRS) as a group and reported at least one measure, or (b) elected the PQRS Administrative Claims option as a group. Groups that fall under Category 1 have two options: 1. Receive a 0.0% payment adjustment Or 2. Voluntarily elect Quality- Category 2 Includes groups that do not fall within either of the two subcategories (a) or (b) of Category 1. Groups will receive an automatic -1.0 percent adjustment. Quality-Tiering: CMS will use the group s performance rates on the quality and cost measures to determine whether the group should receive an upward, downward, or 0% adjustment CMS categorizes groups of physicians with 10 more EPs into two categories Category 1 Quality tiering is mandatory: Upward, Downward or no payment adjustment is applied. Physician groups between 10 and 99 EPs will not be subject to any downward adjustments. Physician groups of 100 or more EPs will be subject to upward, downward or no pay adjustments depending on rating. Category 2 Includes physician groups with 10 or more EPs that are subject to the CY 2016 VBM and do not fall within Category 1. Under Category 2, VBM = -2.0%

3 Note: Physician groups with 100 or more EPs in Category 1 will be subject to the -2.0% adjustment if they are classified as low quality/high cost groups. For groups classified as either low quality/average cost or average quality/high cost, the adjustment will be -1.0%. CMS will use a similar two-category approach but with different criteria for inclusion in Category 1. Category 1 includes those groups of physicians that meet the criteria for satisfactory reporting of data on PQRS quality measures through GPRO for CY 2016 PQRS payment adjustment. Category 1 will also include those groups of physicians that do not register to participate in PQRS as a group practice in CY 2014 and that have at least 50 percent of the group s EPs meet the criteria for satisfactory reporting of data on PQRS quality measures as individuals for the CY 2016 PQRS pay adjustment, -- or in lieu of satisfactory reporting, satisfactorily participate in a PQRS qualified clinical data registry for the 2016 PQRS payment adjustment. For a group of physicians that is subject to the CY 2016 VBM to be included in Category 1, the criteria for satisfactory reporting (or satisfactory participation in case of the 50 percent option) must be met during the CY 2014 performance period for the PQRS CY 2016 payment adjustment. For 2016, the maximum negative payment adjustment is -2.0 percent. New in 2016 will be the adjustment of cost measures based on the specialty composition of the group. CMS previously used peer grouping methodology which it found to have various impacts on groups of physicians that are comprised of different physician specialties. Value-Based Payment Modifier Amounts For 2015 and 2016, CMS will calculate the aggregate downward payment adjustments based on group performance and then distribute that amount to those groups that are eligible for an upward payment adjustment based on the formulas below. CY 2015 Cost/Quality Low Quality Average Quality High Quality Low cost +0.0% +1.0x* +2.0x* Average Cost -0.5% +0.0% +1.0x* High Cost -1.0% -0.5% +0.0% * Eligible for an additional +1.0x if (1) reporting quality measures via the web-interface or CMS-qualified registry, and (2) average beneficiary risk score is in the top 25 percent of all risk scores. CY 2016 Cost/Quality Low Quality Average Quality High Quality Low cost +0.0% +1.0x* +2.0x* Average Cost -1.0% +0.0% +1.0x* High Cost -2.0% -1.0% +0.0% * Groups of physicians eligible for an additional +1.0x if reporting Physician Quality Reporting System quality measures and average beneficiary risk score is in the top 25 percent of all beneficiary risk scores.

4 Calculation of Upward Payment Adjustment Example: After determining the aggregate projected amount of the downward payment adjustment, CMS could calculate that the payment adjustment factor(x) would be 0.75 percent. A physician group that receives a high quality/low cost rating would receive 1.5 percent (2 x 0.75) upward payment adjustment. Physician groups that care for high-risk patients are eligible for a greater upward payment adjustment (an additional +1.0x). For example, a physician group that receives a high quality/low cost rating, could receive a 2.25 percent upward payment adjustment (3 x 0.75). The adjustment factor would be 3.0x instead of 2.0x. How will CMS align VBM with PQRS requirements? CMS believes it is important to continue to align the VBM with the requirements of PQRS, in part to alleviate the reporting burden on physicians. CMS will continue to include for the VBM all of the PQRS GPRO reporting mechanisms available to group practices for the PQRS reporting periods and all of the PQRS reporting mechanisms available to individual EPs for the PQRS reporting periods. In addition, groups of physicians with 25 or more EPs will be able to elect to include patient experience of care measures through the PQRS CAHPS Survey for 2014 in their VBM for In addition for 2016, CMS is using all of the quality measures that are available to be reported under the various PQRS reporting mechanisms to calculate a physician group s CY 2016 VBM to the extent the group (or individual EPs in the group, in case of the 50% threshold option) submits data on those measures. What quality measures will CMS use to determine the VBM? CMS will use the PQRS quality measures reported by a group under its selected reporting mechanisms (i.e., Group practice reporting option (GPRO) web-interface, CMS-qualified registry, or PQRS Administrative Claims option for 2015 only). CMS also will analyze claims to automatically calculate performance on three outcome measures the two composite rates of potentially preventable hospital admissions and the all-cause hospital readmission measure. What cost measures will CMS use to determine the VBM? CMS is required by law to evaluate costs, to the extent practicable, based on a composite of appropriate measures of costs. For 2015, to calculate the VBM, CMS will use the following cost measures to calculate the VBM: Total per capita cost (including payments under both Part A and Part B, but do not include Medicare payments under Part D for drug expenses)

5 Per capita cost for beneficiaries with four specific chronic conditions: 1)Chronic obstructive pulmonary disease (COPD), 2)Heart failure, 3)Coronary artery disease (CAD), and 4)Diabetes. For 2016, CMS will use a Medicare Spending Per Beneficiary measure (MSPB) in addition to the cost measures used in The MSPB measure includes all Medicare Part A and B payments during an MSPB episode spanning from three days prior to an index hospital admission through 30 days post-discharge with certain exclusions. The costs are risk-adjusted and the included payments are standardized to remove differences attributable to geographic payment adjustments and other payment factors. The MSPB will be attributed to the physician group that furnished the plurality of Part B services during the hospital admission. For 2016, in cases where CMS is unable to attribute a sufficient number of beneficiaries (at least 20) to a group of physicians and therefore unable to calculate the cost measures, the physicians composite score would be classified as average under the quality-tiering. What is the purpose of the Physician Feedback Reports? CMS will continue to produce and disseminate Physician Feedback reports (also known as Quality and Resource Use Reports (QRURs)) to physicians. These reports will include a first look at the methodologies CMS finalized for the VBM. CMS views these reports as a way to help educate groups of physicians about how the VBM could affect their payment under the PFS. In September of 2013, CMS made available CY 2012 QRURs to 6,779 physician groups nationwide with 25 or more EPs. These reports covered approximately 400,000 physicians practicing in large medical groups. The QRURs provided groups of 100 or more EPs with quality-tiering information on 2012 data that they could use to decide whether to elect to be assessed under the quality-tiering approach that CMS adopted for the VBM that will be applied in 2015, based on 2013 performance. Of the 3,876 groups for whom the quality or cost composite could be calculated based on 2012 data, over 80 percent of the groups (80.7 percent) are in the average quality and average cost tiers under the quality-tiering methodology and would not receive a payment adjustment. Approximately 8 percent of groups are in tiers that would receive an upward adjustment, and slightly less than 11 percent of groups are in tiers that would receive a downward adjustment. Among the groups eligible for an upward adjustment, 11 percent would receive an additional 1.0 percent incentive payment due to treating high-risk beneficiaries. In the late summer of 2014, CMS plans to disseminate the QRURs based on CY 2013 data to all physicians even though groups of physicians with fewer than 100 eligible professionals will not be subject to the VBM in CY These reports will contain performance on the quality and cost measures used to calculate the VBM and additional information to help physicians coordinate care and improve the quality of care furnished. The reports will be based on the VBM policies that took effect January 1, 2014 and that will affect physician payment starting January 1, After the reports are released, CMS will again solicit feedback from physicians and continue to work with its partners to improve them.