10 FAQs about the Value-Based Payment Modifier and the impacts of PQRS

Did you know?

  • The VBM applies to MSSP ACOs this year?
  • As few as 3% of your providers can affect your total score by as much as 50%?
  • Most importantly, that VBM quality and cost performance will constitute up to 60% of a provider’s future MIPS score?

SA Ignite brings clarity to these questions and more in these FAQs.

1. What is the Value-Based Payment Modifier?

The value-based payment modifier (VBM) program competitively rates Medicare Part B professionals on quality measures (such as PQRS measures) and cost measures to determine upward or downward payment adjustments to their Part B reimbursements (note: Part A hospital and Part C Medicare Advantage payments are not impacted by VBM).  CMS designed VBM to be globally budget-neutral so that the national incentive pool equals the size of the penalty pool. Hence, high-performing professionals are in essence rewarded with dollars taken from low-performing professionals.

For the 2015 performance year, the Part B payment adjustment ranges from a -4% penalty to a +4% incentive for provider groups with at least 10 eligible professionals (EPs), and is +/-2% for groups and solo practitioners with less than 10 EPs. EPs are professionals meeting the eligibility criteria of the Physician Quality Reporting System (PQRS) program.

VBM payment adjustments are applied to Part B payments paid to the provider group in the 2nd calendar year after the performance year.  For example, quality and cost scores for the 2015 performance year lead to adjustments of Part B payments in 2017 to the provider group.   CMS delivers a performance-year scorecard, known as a “Quality and Resource Use Report” or “QRUR”, in the Fall of the year after that performance year.   In addition, provider-identifiable VBM payment adjustment performance and PQRS measures are or will be published to the CMS Physician Compare website (see FAQ # 5 below on reputational impacts of VBM) for consumers to view and 3rd-parties to download.

VBM quality and cost performance are determined on a group-by-group basis and tied to each provider group’s tax identification number (TIN) through which Part B payments are paid. VBM Quality and Cost Scores are based upon: (1) PQRS measures submitted by each provider group as a whole (group practice reporting option, or “GPRO”) or individual professionals belonging to the provider group, and (2) claims-based quality and cost measures spanning both Medicare Part A (inpatient) and Part B services for Medicare beneficiaries attributed to the provider group.

2. What provider groups are eligible for VBM?

For the 2015 performance year, all provider groups and solo practices each having at least 1 EP (or, equivalently, PQRS-eligible professional) is subject to VBM.  EPs include both physicians and non-physicians for the purpose of counting how many EPs are billing Medicare Part B under a given group’s TIN.

The eligibility net of VBM has widened considerably over the last few years.  Notably, 2015 is the first performance year in which provider groups and solo practitioners participating in the following CMS programs are now subject to VBM payment adjustments:

Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs),
Pioneer ACO Model,
CPC Initiative, and
similar CMS Innovation Center models and CMS initiatives, as determined by CMS.

3. How does a provider group meet the minimum reporting requirements for VBM and thereby avoid an automatic penalty?

VBM essentially borrows from the PQRS program in setting minimum PQRS reporting requirements. In order to avoid an automatic VBM penalty, a provider group must do one of the following: (a) register and report as a PQRS GPRO for the group’s TIN, or (b) report at least 50% of the group’s EPs for PQRS on an individual-EP basis.  Under option (a), registration with CMS for a GPRO PQRS reporting method, such as by registry or EHR, is due by June 30th of the performance year, and the declaration cannot be changed after the deadline.  Note that there are no minimum reporting requirements with respect to VBM cost measures, as those measures are calculated by CMS based upon submitted Part B claims.

4. What are the financial impacts of VBM?

For the 2015 performance year, the automatic VBM penalty applied to provider groups not satisfying the minimum VBM reporting requirements outlined above in FAQ #3 is -4% for provider groups with at least 10 eligible professionals (EPs) and -2% for groups and solo practitioners with less than 10 EPs.   This automatic penalty is in addition to the -2% assessed by the PQRS program, so that a total penalty of -6% is applied for non-PQRS-reporting groups having at least 10 EPs and -4% for groups and solo practitioners with fewer than 10 EPs.

Importantly, for the 2015 performance year, the payment adjustment will only be applied to physicians billing to the group’s TIN in the 2017 payment adjustment year.  So although non-physicians count as EPs for the purpose of determining the size of a group and thereby the potential payment adjustments outlined in this FAQ #4, non-physicians’ 2017 Part B payments are not subject to VBM payment adjustments.   However, CMS has finalized the 2016 performance year for 2018 payment adjustments to apply to physicians and non-physicians alike.

Should the minimum VBM reporting requirements be met, all such provider groups and solo practitioners, as identified by TIN, receive Part B payment adjustments based on whether they are rated as “high, average, or low” on quality and cost dimensions relative to peers nationally.  As reported on an organization’s annual QRUR report, a quality or cost score of equal to or less than -1.0 (one standard deviation below the national mean performance) is deemed “low”, between -1.0 and 1.0 is “average”, and equal to or above 1.0 is “high”.

For a provider group with at least 10 EPs, the following payment adjustment table reflects the +/-4% range of payment adjustment for the 2015 performance year (to be applied to payments in 2017):

The “x” factor is a budget-neutrality factor designed to make the national VBM incentive pool equal to the assessed national VBM penalties, including those automatic penalties for non-PQRS-reporting entities.  By way of example, for the 2013 performance year, x was 4.9% (from the CMS 2015 Value Modifier Program Experience Report), due to a significant number of non-PQRS-reporters.  If for the 2015 performance year x were to reduce by half to 2.5%, due to greater compliance with the VBM minimum PQRS reporting requirements, then the maximum VBM incentive would be 4.0*2.5% = 10%.  Under this scenario, an additional 1.0*2.5% = 2.5% would be awarded if the group’s average Medicare beneficiary cost-risk score were in the top 25% of all beneficiary cost-risk scores nationally.

For a provider group or solo practice with fewer than 10 EPs, the following payment adjustment table reflects the +/-2% range of payment adjustment for the 2015 performance year (to be applied to payments in 2017):

Reference for payment adjustment tables - see slides 22-23

5. What are the reputational impacts of VBM realized through the public reporting of performance to consumers?

Regarding the public reporting of VBM performance to consumers, VBM amplifies penalties for groups not participating in PQRS reporting, resulting in an increase in the volume of PQRS measures available to be publicly reported by the PQRS program through the Physician Compare website.

All PQRS measures gathered through all PQRS reporting methods and for all groups and solo providers will be reported publicly through the Physician Compare website in a provider-identifiable way.  Any third-party organization will be able to download the approximately 10 gigabyte zip file containing all the data to repurpose through their own website, such as how the Weather Channel or WeatherBug monetize weather data sourced freely from the National Weather Service. The reputational and consumer-choice impacts on provider organizations have the potential to dwarf the direct financial impacts of value-based payment modifier incentives and penalties.

For the 2016 performance year, CMS has finalized revising the 5-star rating system to show a provider’s PQRS measure performance relative to the best-performing peers, rather than relative to static thresholds.  In other words, there will be winners and losers. For instance, currently “4 stars” on Physician Compare means an absolute performance rate of 80% on a PQRS measure, which may not be meaningful to a consumer. Under the new PQRS measure rating system, a provider receiving “4 out of 5 stars” very likely means that provider ranks highly relative to most other providers reporting that PQRS measure.  The new competitive rating system will be similar to those currently used by consumers to shop for travel, entertainment, and other goods and services.  PQRS measure performance is typically publicly-reported on the Physician Compare website within 18 months of the end of the performance year in question.

6. What are important annual VBM deadlines and milestones?

~ July Before Performance Year:

CMS publishes proposed Medicare Part B Physician Fee Schedule (PFS) containing proposed VBM and PQRS rules for the following performance year, e.g. in July 2015 for the 2016 performance year
~ September/October Before Performance Year:

CMS makes each provider group or solo practice’s QRUR for the prior calendar year’s performance available for download, e.g. in September 2015 for the 2014 performance year.
~ November Before Performance Year:

CMS publishes final PFS containing the final VBM and PQRS rules for the following performance year, e.g. in November 2015 for the 2016 performance year.
January 1st of the Performance Year:

The full VBM and PQRS performance year begins.
June 30th of the Performance Year:

Deadline to declare PQRS GPRO method for the current performance year.
December 31st of the Performance Year:

The full VBM and PQRS performance year ends.
February 28th or March 31st after Performance Year:

PQRS measure reporting deadline, dependent upon which PQRS reporting method chosen.
January 1st to December 31st of the Second Year After the Performance Year:

Payment adjustment based on the performance year applied to Medicare Part B payments paid to the provider group or solo practice.

7. How might your chosen PQRS reporting method and selected PQRS measures impact the VBM Quality Score?

A provider group or solo practice may select from a myriad of PQRS quality reporting methods for a given performance year.  In addition, for a number of reporting methods, different PQRS measures may be selected to report for a given group or individual professional.

Experience has shown that selecting a different PQRS reporting method or different PQRS measures for a given PQRS reporting method, based upon the same patient data, can have a dramatic impact on VBM quality scores and payment adjustments.

For instance, simply selecting a GPRO group-reporting method rather than reporting EPs individually for PQRS can cause the VBM Quality Score to change by 2.0 or more, resulting in switching between one or even two payment tiers and meaning the difference between receiving an incentive or a penalty.  Changing selected PQRS measures to report, from the very same available patient data, can similarly cause the VBM Quality Score and resultant payment adjustment to swing dramatically.

Finally, choosing which PQRS measures to focus limited time and resources on improving can be a critical decision impacting how much the VBM Quality Score can be improved, as particular PQRS measures may have much greater leverage on increasing the score than other PQRS measures.

To learn more about the impacts of PQRS decisions on VBM scores and reimbursement, check out our August 20, 2015 webinar or contact us.

8. How does VBM treat providers who either bill Medicare Part B under more than one TIN or who switched TINs mid-year?

VBM essentially treats each combination of professional (as identified by NPI number) and organization (as identified by TIN) as a distinct entity for purposes of counting EPs belonging to a group and for applying payment adjustments.

For instance, if a professional bills Medicare Part B under two TINs, then that EP will be counted as an EP for both TINs by CMS.  For 2015, this can be important in determining whether a group has fewer or at least 10 EPs, which dictates the possible payment adjustments.

Furthermore, the VBM payment adjustment assessed to each of such TINs X and Y would apply to the Part B payments to that professional through each TIN, respectively.  It is then possible for a professional to receive an upward VBM adjustment for payments billed through TIN X, while receiving a downward VBM adjustment for payments billed through TIN Y.

Furthermore, TIN-level VBM scores “do not follow” a professional as that individual changes organizations.  For instance, if a professional joins an organization in 2017, then that professional’s Part B payments billed through that organization will be subject to the organization’s 2017 payment adjustment as determined by the organization’s VBM performance for the 2015 performance year. Hence, the professional’s former organization’s performance has no bearing on the payment adjustments applied to the professional’s new organization.

If a professional with a given NPI is billing through a TIN reporting as a GPRO, then the professional may not report PQRS individually for that NPI/TIN combination.  However, if a professional bills through two different TINs, where TIN A is reporting as a GPRO, but where TIN B is not reporting as a GPRO, then the professional may report PQRS individually for the NPI/TIN B combination.  You may consult a useful FAQ published by CMS regarding the issue of multiple TINs with respect to PQRS.

9. How will VBM ultimately roll into the Merit-Based Incentive Payment System (MIPS)?

In the spring of 2015, Congress and the President approved the so-called "doc fix" bill, which repealed Sustainable Growth Rate (SGR) Part B payment formula with a new value-based program, the Merit-Based Incentive Payment System (MIPS).

Most likely starting with the 2017 performance year, MIPS consolidates penalties, amplifies incentives, bolsters competition, and intensifies public reporting of performance across VBM, PQRS, Meaningful Use, and other programs by rolling them together under a single program umbrella.

Each provider will earn a MIPS score of 0 to 100, whereby high-performing providers may earn annual incentives of up to 27% of Part B payments and low-performing providers will be assessed penalties of up to -9% of Part B payments.

Needless to say, this potential low-to-high swing of 36% of Part B payments has captured the attention of the C-suite.  VBM quality and cost performance constitute up to 60% of a provider’s MIPS score.

Read our MIPS FAQs and view our ABCs of MIPS monthly webinars to learn more.

10. What’s a good CMS resource to understand the details of VBM?

In the 4th quarter prior to each performance year, CMS delivers a live webinar on the final VBM rules for the upcoming performance year, as part of an overview of all updates to physician quality reporting programs for Medicare Part B.  For example, the webinar for the 2015 rules is recorded and accompanied by a downloadable presentation.

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