American College Of Surgeons - Inspiring Quality: Highest Standards, Better Outcomes

Value-Based Payment Modifier

Starting in 2017, the Merit-based Incentive Payment (MIPS) System merges the Physician Quality Reporting System (PQRS), the Value-based Payment Modifier (VM), and the EHR Incentive Program (EHR-MU); adds a new component called Improvement Activities; and combines these components into a single composite MIPS Final Score. For information on the MIPS program, please visit the ACS Quality Payment Program Resource Center.

The VM, authorized under the Affordable Care Act, provides either bonus payments, penalties, or no bonus or penalties (neutral adjustment) to a physician’s Medicare fee-for-service payments based on the quality and cost of the care they provide. The Centers for Medicare & Medicaid Services (CMS) will apply the VM to all physicians.

To avoid 2018 VM penalties, surgeons must have participated in the PQRS in CY 2016. Lack of successful participation in the PQRS program in CY 2016 will result in a 2 percent PQRS payment penalty and may result in additional penalties up to 4 percent under the VM. New for 2016, CMS will apply a payment adjustment period to nonphysician EPs who are physician assistants (PAs), nurse practitioners (NPs), clinical nurse specialists (CNSs), and certified registered nurse anesthetists (CRNAs). Nonphysician EPs will be held harmless for a downward payment adjustment.

Know How You’re Performing

CMS distributes annual Quality and Resource Use Reports (QRURs)—confidential feedback reports that provide information about the resources used (cost) and the quality of care provided by physicians and group practices to Medicare fee-for-service patients. The reports show how groups and solo practitioners performed on the quality and cost measures used to calculate the VM and how the VM will be applied to physician payments. The reports are intended to provide comparative performance data that physicians can use to improve the care provided to Medicare beneficiaries. QRURs are made available to all group practices and solo practitioners nationwide.

Learn more about QRURs and how to obtain yours on our QRUR page.

Components of the VM

There are two metrics used to calculate the VM: quality and cost.

Quality

The quality metrics are based in part on participation in the PQRS program as well as CMS selected claims-based outcomes measures, listed below. It is important that surgeons satisfy the PQRS program requirements in order to avoid additional VM penalties.

PQRS Measures Selected by the Provider

CMS will use the measures reported on by providers for the PQRS program as part of the quality composite score.

Claims-Based Outcomes Measures Selected by CMS

In addition to the PQRS measures, CMS will calculate performance on selected claims-based outcomes measures. CMS uses a two-step attribution process to associate beneficiaries to a provider’s tax identification number when assessing these measures. These measures include:

  • Composite of rates of potentially preventable hospital admissions for heart failure, chronic obstructive pulmonary disease, and diabetes
  • Composite rate of potentially preventable hospital admissions for dehydration, urinary tract infections, and bacterial pneumonia
  • Rates of an all‐cause hospital readmissions measure

CMS will assess the quality measures for which there are a minimum of 20 eligible cases and equally weight them to calculate a quality of care composite score. If a provider does not have enough data on the quality measures (or if the quality measure does not apply to them), they will be deemed to be “average” for the quality component.

Cost

The cost metrics used by CMS to calculate the cost performance include five total per capita cost measures and the Medicare Spending per Beneficiary measure. CMS uses a two-step attribution process to associate beneficiaries to a provider’s tax identification number (TIN) when assessing these measures. The cost measures include:

  • Total per Capita Costs for All Beneficiaries evaluates all Medicare Part A and B costs associated with any beneficiary over a year. Beneficiaries are attributed to the group that provided the plurality of primary care services to that individual
  • Total per Capita Costs for Select Conditions evaluates Part A and B costs for patients with specific conditions (heart failure, coronary artery disease, chronic obstructive pulmonary disease, and diabetes). Beneficiaries are attributed to the group that provided the plurality of primary care services to that individual
  • Medicare Spending per Beneficiary evaluates Part A and B costs spanning three days prior to and 30 days after an inpatient hospitalization. Beneficiaries are attributed to the group that provided the plurality of Part B services during the inpatient stay

Similar to the quality measures, CMS will assess the cost measures for which there are a minimum of 20 eligible cases and equally weight them to calculate the cost composite score.

Both the quality and cost composite scores will be equally weighted to determine the VM score as shown in the graphic created by CMS below.

VM Scoring
CMS will then divide each physician and physician group’s quality and cost composite scores into three tiers based on whether the score is above, at, or below the mean. This is known as “quality tiering” and this will determine whether they will receive a bonus, penalty, or no bonus or penalty under the VM.

2018 VM (for Performance Year 2016)

The 2018 VM will be applied to all physicians based on how they perform on their overall cost and quality performance in CY 2016.

Solo practice physicians and groups up to nine physicians will avoid VM payment penalties, but may see either of the following:

  • Bonus payment
  • Penalty
  • Neutral adjustment (no bonus or penalty)

Groups of 10 or more providers will be subject to one of the following:

  • Bonus payment
  • Penalty
  • Neutral adjustment (no bonus or penalty)

2016 performance year/2018 PQRS and VM assessment

Groups of 10 or more have two options in CY 2016 to avoid the 2018 VM penalty:

  • Option 1: Consider participating in PQRS as a group through the Group Practice Reporting Option. Assuming successful PQRS participation, this will be the best way to ensure that all members of the group avoid the PQRS penalty. To determine whether your group has already been enrolled to participate in PQRS in this manner, contact the CMS Quality Net Help Desk and provide them with your group tax identification number (TIN). They can be reached at: 1-866-288-8912. Note that PQRS measures chosen for this option may or may not be relevant to surgeons in the group. Additionally, based on CMS’ determination of the groups cost and quality performance for the VM, groups may also avoid the VM penalty, but may also be at risk for a VM penalty.
  • Option 2: Ensure that at least 50 percent of the group’s members are participating in PQRS through one of the Individual Reporting Options. This PQRS reporting method will allow individual surgeons to choose which measures to report on and therefore allow them to choose what is most applicable for their practice. Depending on CMS’ determination of the group’s quality and cost, this option may allow all members of groups of 10 or more to avoid receiving a penalty under the VM. However, in this situation, those providers who did NOT submit PQRS data and those who did NOT successfully report for PQRS, will still be subject to a 2 percent PQRS payment penalty.

Resources for VM

Quality and Resource Use Reports

CMS VM Website

VM Attribution Process

For further information, please contact Sadhana Chalasani at schalasani@facs.org or 202-672-1517.