The Value-Based Payment Modifier:
How to Prepare Your Practice

What is it?

The Value-Based Payment Modifier (VBPM), established by the Patient Protection and Affordable Care Act (ACA), is part of the Centers for Medicare & Medicaid Services’ (CMS) effort to move toward physician reimbursement that rewards value over volume in the Medicare program.

The VBPM relies on PQRS participation for the purposes of reporting quality

CMS also utilizes outcomes and cost measures when determining whether to apply an upward, downward or neutral payment adjustment!

These payment adjustments will also be based on how the practice’s quality and cost performance compares to national benchmarks.

The VBPM must be budget neutral, meaning upward payment adjustments for higher quality.

When will it be applied and for who?

CMS is taking a phased-in approach in implementing the VBPM.

Groups with 100+ EPs will see the VBPM applied to their 2015 payments based on their performances in 2013.

CMS will complete the phase-in by applying the VBPM to all physicians, including those in Medicare Shared Savings Program (MSSP) and Pioneer Accountable Care Organizations (ACOs), in 2017 based on their performance in 2015.

2013 performance – potentially modifies 2015 payment for:

Group practices with 100 or more EPs

2014 performance – potentially modifies 2016 payment for:

Group practices with 10 or more EPs

2015 Performance – potentially modifies 2017 payment for:

All Medicare Part B fee for service physicians

How are payments impacted by the VBPM?

CMS applies any penalties or bonuses to the Medicare paid amounts for items and services billed under the PFS at the Tax Identification Number (TIN) level so that beneficiary cost-sharing is not affected.

While a practice’s group size is determined by assessing the number of EPs billing under the TIN, any penalties or bonus payments made during the 2015-2017 program years will be issued only to items and services billed by physicians under the TIN.

How does it work?

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Quality-Tiering

The quality-tiering analysis under the VBPM provides an upward, neutral or downward payment adjustment based on the group’s performance on quality and cost measures as compared with national benchmark performance data in these areas.

In 2017, groups with 2-9 EPs and solo practitioners will be held harmless from any downward payment adjustments while groups with 10+ EPs may see up to a -4% payment adjustment.

Upward adjustments, or incentives earned under quality-tiering, will be established by CMS after the performance period has ended.

Incentive payments will be based on the aggregate amount of downward payment adjustments determined under budget neutrality requirements.

CY 2017 VM Payment Adjustment Amounts for Groups with 2-9 EPs and Solo Practitioners

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* Groups and solo practitioners are eligible for an additional +1.0x if reporting measures and average beneficiary risk scores are in the top 25% of all beneficiary risk scores, where ‘x’ represents the upward payment adjustment factor.

CY 2017 VM Payment Adjustment Amounts for Groups with 10+ EPs

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*Groups are eligible for an additional +1.0x if reporting measures and average beneficiary risk scores are in the top 25% of all beneficiary risk scores, where ‘x’ represents the upward payment adjustment factor.

Quality Measures

CMS calculates the quality composite score based on a TIN’s performance on six equally-weighted quality domains:

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• Clinical Process/Effectiveness
• Patient and Family Engagement
• Population/Public Health
• Patient Safety
• Care Coordination
• Efficient Use of Healthcare Resources

From each of these domains, based on how a group reported for PQRS, the VBPM quality composite score will include all 2015 PQRS quality measures and reporting mechanisms available for both individual and GPRO reporting when calculating the 2017 VBPM.

Outcomes Measures

Utilizing claims data as well as measures data reported via PQRS reporting mechanisms, CMS will automatically calculate performance on these three outcomes measures as part of the VBPM quality-tiering analysis:

1) Composite of Acute Prevention Quality Indicators

A composite of rates of potentially preventable hospital admissions for dehydration, urinary tract infections and bacterial pneumonia.

2) Composite of Chronic Prevention Quality Indicators

A composite of rates of potentially preventable hospital admissions for heart failure, chronic obstructive pulmonary disease and diabetes.

The rate of potentially preventable hospital admissions for diabetes is a composite measure of uncontrolled diabetes, short term diabetes complications, long term diabetes complications and lower extremity amputation for diabetes.

3) All cause readmission

The rate of provider visits within 30 days of discharge from an acute care hospital per 1,000 discharges among eligible beneficiaries assigned.

CMS will exclude this measure from the quality domain for a group or solo practitioner who has fewer than 200 cases during the relevant performance period.

Performance on outcomes are risk-adjusted to account for patient characteristics that may lead to higher costs and lower quality of care.

Cost Measures

CMS will calculate the following cost measures as part of the VBPM quality-tiering analysis:

1) Total per capita costs

Total per capita costs include payments under both Part A and Part B, but do not include Medicare payments under Part D.

2) Total per capita costs for beneficiaries with the four chronic conditions

Chronic Conditions

• Chronic Obstructive Pulmonary Disease (COPD)
• Heart Failure
• Diabetes
• Coronary Artery Disease

3) Medicare spending per beneficiary measure (MSPB)

An MSPB episode spans from three days prior to an index admission at a subsection (d) hospital through 30 days post discharge, with some exclusions.

CMS calculates the MSPB amount as the measures performance rate.

CMS will risk adjust and standardize all VBPM cost measures.

Patient Attribution

Patient attribution is based on the plurality of primary care services a physician or non-physician practitioner provides to a beneficiary.

If a beneficiary is not assigned in the first step, CMS will attribute the beneficiary to a group practice or physician that provided the plurality of primary care services, regardless of specialty.

Minimum number of cases

CMS will use a minimum case size of 20 in order for a quality or cost measure to be included in the quality of care or cost composite.

To the extent that a group of physicians fails to meet the minimum number of cases for a particular measure, the measure would not be counted and the remaining measures in the domain would be given equal weight.

Risk Adjustment

Per capita cost measures are risk-adjusted to account for differences in patient medical costs.

CMS utilizes a prospective two-model approach when determining its risk adjustment of per capita cost measures.

The CMS HCC risk adjustment model is used to first determine beneficiary-level risk scores, which are then used to determine the risk adjustment factors applied to each TIN through the QRUR risk-adjustment model.

Specialty Adjustment

CMS uses “specialty benchmarking” in an attempt to more accurately account for a group practice’s specialty composition so that quality-tiering produces fair peer group comparisons.

Specifically, prior to computing a standardized score for each cost measure, the agency adjusts the standardized score calculation by applying a “specialty adjustment” to account for the group’s specialty composition.

Determining group practice size

CMS determines group practice size at the TIN level, using data from PECOS as well as Medicare claims data.

Quality and Resource Use Reports (QRURs)

Under the ACA, CMS is required to provide physicians and group practices with confidential reports that contain data on the quality of care the physician or group practice provided to its attributed Medicare fee-for-service beneficiaries and the costs associated with this care.

Currently, the agency is only providing these reports on a calendar year basis; however, CMS is considering releasing these reports more frequently in the future.

CMS Resources

Medicare Physician Value-Based Payment Modifier : go.cms.gov/1MMiWYA

CMS Summary of 2015 VBPM
policies: go.cms.gov/1BwuFnG