Health Care Reform

    Value-Based Modifier Changes for the 2015 Medicare Physician Fee Schedule

    Review of Proposed Changes
    THE AFFORDABLE CARE ACT (ACA) established a value-based payment modifier that provides for differential payment to physicians based on the quality of care provided in relation to the cost of providing that care. The modifier must be budget neutral implying that a reward for high-quality care is offset by a penalty for poor-performance care as measured through alignment with the Physician Quality Reporting System (PQRS).

    The INITIAL component in the modifier determination is PQRS participation through satisfactory reporting of data on PQRS quality measures via the PQRS Group Practice Reporting Option (GRPO) (through the use of the web-interface electronic health record) or through satisfactory participation in a PQRS-qualified clinical data registry. All EP’s (eligible providers) that meet the initial reporting requirements are placed in Category 1 and Category 1 providers are then further quality-tiered for further adjustments. Those providers who do not meet Category 1 requirements fall into Category 2. Category 2 providers are only eligible for a downward payment adjustment. Quality-tiering methodology is being utilized for value determination within the initial category. Eligible providers are classified as either low quality/average cost, average quality/high cost, high quality/low cost or average quality/low cost. The value based modifier would be applied based on the tier the EP is placed in from PQRS reporting.

    In the CY 2015 Proposed Medicare Physician Fee Schedule Rule, CMS is proposing to increase the downward adjustment from -2.0 percent to -4 percent for 2017, using a data collection year of 2015. In other words, a -4.0% Value Modifier would be applied to EP’s that don’t meet quality reporting requirements for the PQRS (Category 2) or to the quality tiers classified as low quality/average cost or average quality/high cost within Category 1. However, solo providers and groups of 2 to 9 EP’s would receive only upward or neutral adjustments in 2017, given that this will be their first year under the VBM program. Groups with 10 or more EP’s would receive upward, neutral, or downward adjustments. This approach is designed to reward groups and solo practitioners that provide high quality/low-cost care, reduce program complexity, and engage groups and solo practitioners into the Value Modifier as the phase-in is completed.

    It is proposed that the Value Modifier begin in 2017 for ALL eligible providers and all physician groups including solo practitioners. A physicians’ value modifier adjustment would be based on the 2015 data collection year. This proposal would complete the phase-in of the Value Modifier that began in 2013 with the adjustment in 2015 for groups over 100 Eps and has continued to expand in subsequent years. This program is expected to involve 815,000 physicians and 315,000 non-physician providers.

    CMS is also applying the Value Modifier to physicians and non-physician providers that participate in an ACO (Accountable Care Organization) under the Medicare Shared Savings Program during the payment adjustment period. Beginning in 2017, practitioners that participate in the Pioneer ACO Model, the Comprehensive Primary Care (CPC) Initiative, or other similar Innovation Center models or CMS initiatives will also participate in the Value Modifier.

    There is a proposal also to expand the informal inquiry process for the Value Modifier starting in CY 2015. CMS will establish a “brief” period for a group or solo practitioner to request correction of a perceived error made by CMS in the determination of its Value Modifier adjustment. CMS is currently developing the necessary infrastructure to support this process. They currently propose to classify an EP as “average quality” to the extent CMS determines it has made an error in the calculation of the quality composite.

    CMS has been distributing Quality and Resource Use Reports (QRURs) for three years to physicians providing feedback regarding quality and cost-of-care furnished to Medicare beneficiaries. CMS plans to continue with this service explaining how the Value Modifier would affect a provider’s reimbursement under PFS (Physician Fee Schedule). In the summer of 2014, CMS will provide the information to all providers based on data reported in 2013. This process will continue every summer evaluating the prior years reported data so that a provider may see how he/she fares under the new policy. It is suggested that providers access their 2013 QRURs when available to improve their performance on quality and cost measures. These reports are available via the following link:

    Sustainable Growth Rate (SGR) and Physician Payment Update

    On March 31, 2014, the Senate passed H.R. 4302, the “Protecting Access to Medicare Act of 2014,” which postpones the imminent 24 percent Medicare physician payment cut for 12 months, until April 1, 2015. Although many Senators spoke against passing this 17th Medicare payment patch, the Senate vote was 64 to 35. (Sixty votes were needed for passage.) The House passed an identical version of the bill by voice vote on March 27, and President Obama signed the legislation into law on April 1st. CMS can now move forward with implementation.

    Given the timing of this legislation, the Centers for Medicare and Medicaid Services has instructed the Medicare Administrative Contractors to hold claims containing services paid under the Medicare Physician Fee Schedule (MPFS) for the first 10 business days of April (i.e., through April 14, 2014). This hold would only affect MPFS claims with dates of service of April 1, 2014, and later. The hold should have minimal impact on provider cash flow, because under current law, clean electronic claims are not paid any sooner than 14 calendar days (29 days for paper claims) after the date of receipt. All claims for services delivered on or before March 31, 2014, will be processed and paid under normal procedures.

    Of importance to physicians, H.R. 4302 does the following things:

    Physician Payment Update – Extends the current 0.5 percent update for the next 9 months and provides and zero percent update for January 1 – March 31, 2015.

    Extension of Work GPCI floor – Extends the work GPCI floor of 1.0 until March 31, 2015.

    ICD-10 – Delays the implementation of the ICD-10 code set to not before October 1, 2015.

    Reimbursement for Diagnostic Lab Services – Ties payments for the laboratory fee schedule to market-based private sector payments.

    Promoting Evidence-based Care in Advanced Diagnostic Imaging – Starting in January 2017, healthcare professionals that order advanced diagnostic imaging services – e.g. MRI, CT, PET, and Nuclear Cardiology – must consult appropriate use criteria that has been endorsed by medical societies and selected by the Secretary. Starting in 2020 those physicians that are “outliers,” in their ordering patterns will be required to use a prior authorization program. Outliers are defined at the top 5 percent.

    Misvalued Services Under the Physician Fee Schedule – Sets an annual target of 0.5 percent in savings from misvalued Medicare Physician Fee Schedule services for each of the years 2017 to 2020. If the target is met, the savings are re-distributed to other services, otherwise across the board cuts apply. Also sets new screens to identify potentially misvalued codes. It gives the Secretary of HHS wide discretion to collect information to set the work and practice expense components of the relative values.

    Click here to read AUGS' comment letter to CMS from September 2, 2014.

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