The Centers for Medicare and Medicaid Services (CMS) Value-Based Payment Modifier (VBPM) Program was developed to encourage eligible professionals to improve both quality and efficiency in providing medical care. As such, the program provides incentive payments and payment adjustments based on a medical group’s quality-to-cost ratio.
The program began in 2013 for the 2015 payment adjustment year, and only groups of 100 or more eligible professionals were required to participate. In 2014 for the 2016 payment adjustment year, groups of 10 or more eligible professionals were required to participate. In 2015 for the 2017 payment adjustment year, all physicians—whether in groups of 2 or more or solo practitioners—were required to participate. In 2016 for the 2018 payment adjustment year, the definition of eligible professional was expanded to include nonphysician EPs who are Physician Assistants (PAs), Nurse Practitioners (NPs), Clinical Nurse Specialists (CNSs), and Certified Registered Nurse Anesthetists (CRNAs) practicing in groups or as individuals.
There are several key components of the program to understand.
VBPM Categories
As a first step, all solo practitioners or groups of two or more eligible providers are placed into one of two categories based on their Physician Quality Reporting System (PQRS) performance.
Category I includes groups and individual eligible providers who are successful PQRS reporters. More specifically, the following groups fall into this category:
- Groups who meet the criteria to avoid the 2018 PQRS payment adjustment through any GPRO option,
- Groups with at least 50 percent of eligible providers who meet the criteria to avoid the 2018 PQRS payment adjustment through any individual reporting option, and
- Solo providers who meet the criteria to avoid the 2018 PQRS payment adjustment through any individual reporting option.
Eligible providers in this category will be subject to quality tiering with the potential to earn incentives or be subject to negative payment adjustments. (Quality tiering is discussed in more detail below.)
Category II includes groups and individual eligible providers who are not successful PQRS reporters who will receive an automatic negative payment adjustment for all 2018 Medicare Part B claims in addition to the 2 percent PQRS payment adjustment. Providers who fall into this category are as follows:
- Groups who do not meet the minimum reporting requirements to avoid the 2018 PQRS payment adjustment through GPRO reporting methods,
- Groups who do not have at least 50 percent of their eligible professionals who meet the minimum reporting requirements to avoid the 2018 PQRS payment adjustment through individual reporting methods, or
- Solo providers who do not meet the minimum reporting requirements to avoid the 2018 PQRS payment adjustment through individual reporting methods.
The negative payment adjustments for providers in category II are calculated as follows:
- Groups with 10 or more physicians will automatically receive a 4 percent payment adjustment in addition to the 2 percent PQRS payment adjustment.
- Solo physicians and groups of 2-9 physicians will receive an automatic 2 percent payment adjustment in addition to the 2 percent PQRS payment adjustment.
- Solo nonphysician EPs (PAs, NPs, CNSs, and CRNAs) or groups of only nonphysician EPs will receive an automatic 2 percent payment adjustment in addition to the 2 percent PQRS payment adjustment.
Quality Tiering
Quality tiering is the ratio of quality versus cost composite scores calculated for each solo practitioner or group in Category I based on their standardized performance among all eligible providers in the cost and quality reporting measures.
The VBPM program seeks to reward high quality/low cost groups with incentive payments up to 4.0x the payment factor and penalize low quality/high cost groups with payment adjustments up to 4.0 percent. (The incentive factor is determined annually based on the total payment adjustments since the program is mandated as “budget neutral.”)
According to CMS, most Category 1 groups will have “neutral tiering” and receive neither incentives nor payment adjustments. Also, for the 2016 reporting year, solo nonphysician EPs and groups of only nonphysician EPs are not subject to negative payment adjustments through VBPM since this is the first year for these providers to qualify for the program. Those groups and individual practitioners will receive either neutral tiering or incentive payments of up to a factor of 2.0x.
Solo physicians and groups of 2-9 eligible providers with at least one physician are eligible for incentives of up to 2.0x the factor for high quality and low cost and will be subject to payment adjustments of as much as 2.0 percent for high cost and low quality. Groups of 10 or more eligible providers with at least one physician are eligible for incentives of up to 4.0x the factor for high quality and low cost and will be subject to payment adjustments of as much as 4.0 percent for high cost and low quality.
All TINs receiving an upward adjustment are eligible for an additional +1.0x if their average beneficiary risk score is in the top 25 percent of all beneficiary risk scores nationwide.
Both the payment adjustments and the incentive payments for the VBPM are applied as downward or upward adjustments on Part B payments for the year affected (unlike PQRS incentive payments which were paid in total based on allowed amounts from the reporting year.)
Quality and Cost Measures
As in previous years, VBPM quality reporting is compiled from the group’s performance on PQRS measures and certain outcome measures calculated by CMS from claims submitted for Medicare beneficiaries. Cost reporting is based on total per capita costs (plus Medicare Spending per Beneficiary) and per capita costs for beneficiaries with specific conditions.
As in years past, for cost reporting for the 2016/2018 VBPM program, CMS will use a two-step attribution process to assign each beneficiary to only one group based on who performed the plurality of primary care services. For more information about beneficiary attribution, review the CMS Fact Sheet “Two-Step Attribution for Measures Included in the Value Modifier.” As well, CMS makes certain specialty and risk adjustments based on the specialties of providers and the conditions of beneficiaries.
CMS has acknowledged in the past that “certain large single specialty groups — such as those limited to emergency medicine, diagnostic radiology, pathology, and anesthesiology — will not be attributed any beneficiaries under this attribution methodology.” In that case, the group or solo practitioner that does not have at least one cost measure that meets the minimum number of cases required (125 episodes) for the measure to be included in the calculation of the cost composite will receive a cost composite score that is classified as average under the quality-tiering methodology.
As well, if a group or solo practitioner does not have at least one quality measure that meets the minimum number of cases required for the measure to be included in the calculation of the quality composite (a quality measure must have 20 or more cases to be included, and for groups of 10 or more eligible providers, the all-cause hospital readmissions measure must have 200 or more cases to be included), that group or solo practitioner will receive a quality composite score that is classified as average under the quality-tiering methodology.
What You Should Do
The first action point for all eligible providers (including both physicians and eligible non physician providers) is to ensure you qualify for Category 1 by avoiding the 2018 PQRS payment adjustment during the 2016 reporting year. Being in Category 1 will allow you to avoid the automatic 2 or 4 percent payment adjustment for VBPM.
For solo physicians or groups of two or more providers with at least one physician, the next action point is to begin evaluating your costs through the 2014 Annual Quality and Resource Use Reports (QRURs) disseminated by CMS. These reports provide a look at how you are doing in terms of per capita Medicare costs and spending per Medicare beneficiary. These reports are tabulated based on 2014 calendar year data, but they will give you some idea of where you will stand for the coming year. Be on the lookout in April 2016 for the half-year 2015 QRURs which will give you more updated data about your cost performance.
Remember, 2016 is the last reporting year for VBPM and PQRS, and 2018 will be the last year for VBPM and PQRS payment adjustments. Beginning with the 2017 reporting year (which will affect the 2019 payment year), physicians will be subject to the guidelines of the Merit-Based Incentive Payment System (MIPS), mandated through the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) back in April 2015.
For more information about the 2016/2018 VBPM Program, visit the CMS VBPM web pagewhere updated materials are being added regularly. Also, you can review the slides from a recent MLN Connects National Provider Call on the 2016/2018 PQRS and VBPM Programs.
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