This year CMS has revised requirements that apply to providers who care for Medicare Fee-for-Service (FFS) beneficiaries. The Value-Based Payment Modifier Program adjusts the Medicare Physician Fee Schedule (PFS) to incentivize providers who meet the goals of the Triple Aim: to improve the patient experience and health of populations, and reduce the cost of care.

What is the Value Modifier?

According to the Computation of the 2016 Value Modifier fact sheet published by CMS in September 2015, The Value Modifier began in 2010 as part of the Patient Protection and Affordable Care Act (PPACA) to:

Establish a budget-neutral Value-Based Payment Modifier (referred to here as the Value Modifier) that provides for differential payment under the Medicare PFS to a physician or group of physicians based upon the quality of care compared to the cost of care furnished to Medicare FFS beneficiaries during a performance period.

It is important for providers to note that the Value-Based Payment Modifier Program is separate from the Physician Quality Reporting System (PQRS) payment adjustment and incentives.

In previous years physician groups with 100 or more eligible professionals submitting at least one claim to Medicare using a Taxpayer Identification Number (TIN) were subject to the Value Modifier. Beginning this year, the Value Modifier is applied to the Medicare PFS reimbursements for TINs with 10 or more eligible professionals submitting at least one Medicare claim. Individual providers likewise should not ignore the Value-Based Payment Modifier Program as reimbursements of physicians practicing alone or in groups of two or more will be subject to the Value Modifier beginning in 2017.

If any provider in the TIN is participating in the Medicare Shared Savings program, the Pioneer Accountable Care Organization (ACO) Model or the Comprehensive Primary Care (CPC) initiative, the Value Modifier will not be applied to that organization’s reimbursement through 2016. CMS is developing policy regarding these programs and the VPM program for 2017.

How Are Adjustments Applied?

In order to determine Medicare reimbursement, TINs are categorized into one of 2 groups based on the following criteria:

  1. TINs that met the criteria to avoid the 2016 PQRS payment adjustment or with at least 50 percent of eligible professionals meeting the criteria to avoid the 2016 payment adjustment as individuals.
  2. TINS that do not meet the criteria for category 1. This category will have a -2% (downward payment adjustment) in addition to PQRS negative payment adjustments imposed on the TIN or individual eligible professionals in the TIN. 

Remember that in 2016, the number of participating providers drops from 100 or more to 10 or more and in 2017, individual and all size group-practices will also be included. 

CMS has established a quality-tiering system that allows providers to demonstrate quality care with lower costs, meeting Triple Aim goals, in order to earn an upward Medicare reimbursement. To meet the budget-neutral requirement, the Value Modifier will be based on an adjustment factor that redistributes downward adjustments from Category 2 TINs to quality performing, Category 1 TINs. In addition, Category 1 TINs can earn an additional of +1.0 times the adjustment factor upward payment adjustment for treatment of high-risk Medicare beneficiaries—providers willing to work to prevent costly chronic conditions with quality will be rewarded.

How Are Adjustment Factors Calculated?

The Computation of the 2016 Value Modifier fact sheet reports that performance is based on six quality domain measures and two cost domains as follows:
Quality domains:

  1. Effective Clinical Care
  2. Person and Caregiver-Centered Experience and Outcomes
  3. Community/Population Health
  4. Patient Safety
  5. Communication and Care Coordination
  6. Efficiency and Cost Reduction

Cost domains:

  1. Per Capita Costs for All Attributed Beneficiaries
  2. Per Capita Cost for Beneficiaries with Specific Conditions

Take note that negative reimbursement is figured as a percentage while upward reimbursement is calculated with an adjustment factor, not percentage.

Of course, every clinician provides care differently. Also, the care provided differs based upon the patient’s needs. In order to compare the quality of care across providers, CMS calculates a composite score “by subtracting the benchmark for the measure from the TIN’s performance rate and dividing it by the case-weighted standard deviation of the measure.” This Quality and Cost Composite Score is used to determine the payment adjustment. A deviation of 1 standard above or below determines if a TIN is considered a high or low performer, respectively.

What is the Best Way to Manage Performance for Optimal Reimbursement?

The Value-Based Payment Modifier Program has many moving parts. The incentives for quality of care are not limited to this one program. Healthcare professionals need to monitor PQRS measures, Consumer Assessment of Healthcare Providers and Systems (CAHPS®) performance, and a variety of other standardized methods for quality reporting. As we await the final decision in the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) we know the Medicare payment reimbursement incentives are transitioning to models designed to prevent the costliest conditions and reduce overall cost of care as seen in the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs).

Value Modifiers and Quality and Cost Composite Scores are a good way to incentivize quality performance across the board. Providing quality care and analyzing performance metrics in order to determine the amount of reimbursement are two separate jobs. Trying to excel at either job takes focus away from the other. SPH Analytics (SPHA) Orchestrate products provide healthcare analytic tools that allow focus on the quality of care provided as performance is analyzed based on measures entered at the point of care. SPHA has been administering performance surveys for more than 20 years. Our applications use the knowledge gained from this experience and our relationships with regulatory agencies to guide our analytics as well as offer regulatory and elective surveys that help provide insight into performance that maximizes value-based care opportunities.

SPHA_Quadruple_AimSPHA is empowering healthcare transformation by measuring performance on criteria required for upwards adjustment by quality reporting programs like the Value-Based Payment Modifier Program, MIPS, and MACRA. The data is analyzed for guidance that can be used to take action for performance improvement in a hospital or physician practice, including individual clinician processes that stand in the way of being a high performer and receiving maximum Medicare reimbursement. We take care of the analytics so you can provide quality care that moves towards the goals of the quadruple aim: reduced care cost, improved outcomes, and satisfied patients and clinicians.

CAHPS is a registered trademark of the Agency for Healthcare Research and Quality

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