In the last article, we discussed the double-dipping process the Centers for Medicare & Medicaid Services (CMS) uses for the Physician Quality Reporting System (PQRS) and the Value Based Payment Modifier (VBPM).  Clients ask us, “What is the VBPM and how will it impact the practice?” Here is how CMS defines the VBPM: 

The Value Modifier 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 the cost of care during a performance period. In the future, the Value Modifier will be used to adjust Medicare PFS payments to non-physician eligible professionals (EPs), in addition to physicians. The Value Modifier is an adjustment made on a per claim basis to Medicare payments for items and services under the Medicare PFS. It is applied at the Taxpayer Identification Number (TIN) level to physicians (and beginning in 2018, to non-physician EPs) billing under the TIN.1
 

The Two Parts of VBPM

Groups of 10 or more providers were initiated into the process in 2014, while smaller groups started in 2015. Within the VBPM, there are essentially two parts: quality and cost. The quality aspect aligns with PQRS reporting. Failure to successfully report PQRS in 2015 results in a PQRS penalty of 2 percent for all providers in 2017. In addition, for groups of 10 or more, the VBPM quality aspect adds an additional 4 percent penalty, resulting in a 6 percent cumulative hit in 2017. Groups of fewer than 10 providers receive an additional 2 percent VBPM penalty for a 4 percent cumulative in 2017.1

The second part, the cost analysis, is more complex and uses two different costs. First, CMS considers the total per-capita costs for all attributed beneficiaries and, second, the total per capita costs for beneficiaries with specific conditions: diabetes; coronary artery disease; chronic obstructive pulmonary disease; and heart failure.   

CMS uses a two-step attribution process for assigning patients to providers. In step one, beneficiaries are assigned to the taxpayer identification number (TIN) of a primary-care practice (e.g., family medicine, internal medicine, etc.). Patients not assigned to a primary-care TIN are assigned, in the next step, to a TIN whose providers accounted for the majority of primary-care services.  

Step two includes specialists, ophthalmologists among them, who provide primary-care services. The primary-care service codes do not include eye codes (920xx) but do include outpatient Evaluation and Management (E/M) codes for new and established visits (992xx).Therefore, the attribution process could assign patients to an ophthalmologist’s TIN.2 For any patients attributed to your TIN, their total per-capita costs are also attributed to your TIN.   

Tying in Quality Measures

The 2014 Annual Quality and Resource Use Reports (QRURs) use the data from the patients attributed to each TIN to show how groups and solo practitioners performed in 2014 on the quality-and-cost measures used to calculate the 2016 Value Modifier.3 Every practice should review its QRURs to see how they compare to the established benchmarks and preview the future application of the VBPM. The 2013 and 2014 QRUR reports are available. Follow the Guide for Accessing the 2014 Annual QRURs to acquire the information for your practice.4   

Table 1: Groups With Fewer Than 10 Eligible Professionals 
Cost / Quality
Low Quality
 Average Quality
High Quality
Low Cost +0.0%
+1.0x
+2.0x
Average Cost +0.0% +0.0% +1.0x
High Cost +0.0% +0.0% +0.0%
After the cost-and-quality analysis, the TIN receives quality and cost scores (low, average and high). Combining the quality and cost scores determines the potential positive or negative adjustments.  Tables 1 and 2 reflect the 2017 potential adjustments based on 2015 information. Once the performance period (2015) ends, and the aggregate downward amounts are determined, CMS will apply an adjustment factor (“x”) to determine upward payments.  

For those practices in year one of VBPM, there is no cost penalty in 2017 (Table 1). However, for those practices in the second year of VBPM (Table 2), there are potential up and down adjustments for both cost and quality in 2017. According to CMS, Part B drug payments are not subject to VBPM adjustment; however the administration (i.e., injection) is subject to the adjustment.5   

Fee-for-Service Is Changing


Table 2: Groups of 10 Eligible Professionals or More

Cost/QualityLow Quality
 Average Quality
 High Quality

Low Cost
+0.0%+2.0%+4.0x

Average Cost
-2.0%
+0.0%
+2.0x

High Cost
-4.0%
-2.0%+0.0%
The fee-for-service reimbursement methodology we are familiar with is undergoing significant changes. Successfully reporting PQRS avoids the automatic negative quality adjustments. Practices have control over the success of PQRS, but hold limited influence on the VBPM cost analysis due to its complexity.  

Remember the “benchmarks” for cost analysis are not determined until the performance period is completed. However, acquiring your past QRUR reports will provide an indication of your standing, including general information on patients attributed to your TIN. Use the CMS detailed guide Understanding Your QRUR when reviewing the QRUR.6 VBPM represents the beginnings of considerable change to future reimbursements.  RS

Mr. Mack is a senior consultant with Corcoran Consulting Group. He can be reached at 1 (800) 399-6565 or at www.corcoranccg.com.

References
1. CMS.gov Centers for Medicare & Medicaid Services. Medicare FFS Feedback Program/Value Based Payment Modifier. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/valuebasedpaymentmodifier.html. Accessed October 29, 2015.
2. Centers for Medicare & Medicaid Services Fact Sheet. Two-step attribution for measures included in the Value Modifier. August 2015. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/Attribution-Fact-Sheet.pdf. Accessed October 29, 2015.
3. CMS.gov Centers for Medicare & Medicaid Services. Medicare FFS Physician Feedback Program/Value Based Modifier. 2014 Annual Quality and Resource Use Reports.  Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/2014-QRUR.html#2014-annual-qrur.  Accessed October 29, 2015.
4. Centers for Medicare & Medicaid Services. Guide for Accessing the 2014 Annual QRURs and Supplementary Exhibits. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/Guide-for-accessing-2014-Annual-QRURs.pdf Accessed October 29, 2015.
5. CMS.gov Centers for Medicare & Medicaid Services. CMS Frequently Asked Questions.  Available at: https://questions.cms.gov/faq.php?id=5005&faqId=11892.  Accessed October 29, 2015.
6. Centers for Medicare & Medicaid Services. Understanding your QRUR. September 2015. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/2014-UnderstandingYourQRUR.pdf.  Accessed October 29, 2015.