November 3, 2014

On Friday, October 31, CMS released the Final Rule with Revisions to Payment Policies under the Physician Fee Schedule for 2015. Among numerous changes in the Final Rule are important modifications to the Value-Based Payment Modifier (VM).

Beginning on January 1, 2015, consistent with the Affordable Care Act and CMS’ proposals, the VM will affect all eligible professionals (EPs)— anesthesiologists, nurse anesthetists and anesthesiologist assistants among them.

For the great majority of anesthesia practices, the VM matters for one principal reason, that it will apply an additional payment cut to EPs who do not satisfactorily participate in the Physician Quality Reporting System (PQRS). This cut would be four percent for groups of ten or more EPs and two percent for groups with two to nine EPs and solo practitioners. Thus failure to report under the PQRS in 2015 could cost an EP (in a practice with ten or more EPs) a total of six percent of every Medicare payment in 2017. Approximately 60 percent of anesthesiologists successfully reported their PQRS measures in 2012, the most recent year for which we have data. The proposed cumulative six-percent and four-percent negative adjustments should be sufficient reason for every anesthesia professional to meet at least the minimum PQRS requirements next year.

What is the VM?

The VM, which was mandated by the Affordable Care Act, adjusts payments to physicians, groups of physicians, and other EPs based on the quality and cost of care they furnish to patients enrolled in the traditional Medicare Fee-for-Service program.

EPs practicing high-quality, low-cost care will earn a positive VM, while those whose scores indicate relatively lower quality and higher cost may have a negative VM. Given that the VM program is budget neutral, the amount of the positive modifier is unknown until all groups are scored. After such scoring, the aggregate adjustments applied to the low quality/high cost groups are used to fund the positive adjustment payment to the high quality/low cost groups.

CMS will calculate the VM for each practice. It is derived from a quality composite score and a cost composite score. The quality composite score summarizes the group’s (determined by Tax Identification Number or TIN) performance on quality care for Medicare beneficiaries for as many as six equally weighted quality domains: (1) Clinical Process/Effectiveness, (2) Patient and Family Engagement, (3) Population/Public Health, (4) Patient Safety, (5) Care Coordination, and (6) Efficient Use of Healthcare Resources. Each domain score is based on performance scores for PQRS measures reported, using its associated domain. The cost composite score summarizes a TIN’s performance regarding resource use for its attributed Medicare beneficiaries, across two equally weighted cost domains: Per Capita Costs for All Attributed Beneficiaries and Per Capita Costs for Beneficiaries with Specific Conditions (diabetes, CAD, COPD, and heart failure).

As of yet, there are no cost measures that can be attributed to single-specialty anesthesia groups. A beneficiary (and the beneficiary’s assigned costs) will only be attributed to an anesthesia group if that group provided the majority of the beneficiary’s primary care visits. For groups without cost measure scores, CMS will consider the group’s cost "average" for purposes of the VM adjustments.

The VM Payment Adjustments

The Affordable Care Act required CMS to begin phasing in the VM adjustments by 2015 and to apply them to all physicians by 2017. The Act also gave CMS the discretion to include non-physician EPs as early as 2017. Accordingly,

• Groups of 100 or more EPs will see a VM adjustment in their Medicare payments in 2015 based on 2013 performance data. The large groups that registered for the PQRS Group Practice Reporting Option (GPRO) and elected "quality tiering" could see an upward, neutral or downward adjustment. Groups that registered for the GPRO but did not elect quality tiering will have a zero-percent adjustment. Groups that did not register for the GPRO or did not successfully report under the PQRS will be subject to a negative one-percent adjustment. Groups that were participating in CMS's Medicare Shared Savings Program or its Pioneer Accountable Care Organization program, or that were part of the Comprehensive Primary Care initiative, will not be affected by the VM adjustment until 2017. Groups with fewer than 100 EPs are not subject to the VM until the 2014 performance year/2016 payment year.
• CMS will apply the VM to groups of 10 or more EPs in 2016 based on 2014 PQRS participation. Groups of 10 or more EPs that do not avoid the PQRS penalty in 2014 (-2.0%), will automatically also be subject to the negative two percent VM penalty in 2016, applied at the claim level. Groups who do avoid the 2014 PQRS penalty may receive an upward, neutral or downward VM payment adjustment based on performance scores:
• Groups of 10-99 EPs will only be subject to an upward or neutral payment adjustment in 2016 based on 2014 performance scores.
• Groups of 100 or more EPs will be subject to upward, neutral or downward adjustments based on performance scores. Those groups whose performance scores place them in lower quality/higher cost categories will have payment at risk under the VM of up to two percent.
• In 2017, the VM will apply to all physicians, whether they are in solo practice or in groups of two or more, as well as to all non-physician EPs. For purposes of applying the VM, CMS will continue classifying EPs into two categories based on whether and how groups and solo practitioners participate in PQRS:

Category 2 – all groups and solo practitioners subject to the 2017 VBPM (i.e., EPs) that do not fall under Category 1. CMS would apply the proposed negative four percent VM payment adjustment to groups with 10 or more EPs and a negative two percent adjustment to groups of 2-9 EPs and solo practitioners that fall in Category 2.

Quality Tiering

The way CMS is determining the value modifier—upward, downward, or neutral—is by comparing performance measures of groups of EPs to the average of the previous year. This "quality tiering" will determine if group performance is statistically better, the same as, or worse than the national mean, based on standard deviation calculations. It will apply to groups and solo practitioners in Category 1 so that the maximum bonus for high-quality/low-cost performers would be 4.0

being the upward adjustment payment factor. The upward adjustment payment factor will determined by the aggregate amount of penalties imposed on low-quality/high cost practices.

Groups with between two and nine EPs and solo practitioners that are in Category 1 would be held harmless from any downward adjustments derived from the quality-tiering methodology for the 2017 VM. They would be eligible for upward adjustments of up to 2.0x percent for those classified as either average quality/low cost or high quality/average cost.

Groups of 10 or more EPs who satisfactorily report under the PQRS would potentially be subject to the payment adjustments shown in the following table:

Based on an analysis of claims for 2012, CMS stated in the Proposed Rule (p. 40497) that it estimates "that approximately 6 percent of all eligible professionals are in a Category 1 TIN that would be classified in tiers that would earn an upward adjustment, approximately 11 percent of all eligible professionals are in a Category 1 TIN that would be classified in tiers that would receive a downward adjustment, and approximately 83 percent of all eligible professionals are in a Category 1 TIN that would receive no payment adjustment in CY 2017."

Determining Your Quality Tier: Quality and Resource Use Reports (QRURs)

CMS has been distributing Quality and Resource Use Reports (QRURs) for three years to physicians providing feedback regarding the quality and cost-of-care furnished to Medicare beneficiaries. The Agency has announced its intention to "continue to use the annual QRURs to explain how the Value Modifier would affect payment under the PFS [Physician Fee Schedule]."

On September 30, 2014CMS made available to all groups of physicians and solo practitioners their customized QRURs based on 2013 data. These QRURs contain performance information on the quality and cost measures used to calculate the quality and cost composites of the VM and show how practices with fewer than 100 EPs would fare under the 2015 VM policies. For groups of physicians with 100 or more EPs, the 2013 QRURs show how a group’s payments will be affected by the CY 2015 Value Modifier, including any upward, neutral or downward payment adjustment if the group elected the quality-tiering option. The QRURs also include additional information about the practice’s performance on the Medicare Spending per Beneficiary measure, individually-reported PQRS measures, and the specialty-adjusted cost measures.

CMS (and ABC) encourage practices to access their QRURs so that they may “understand their current performance levels and how to use the information provided in the QRURs to improve their performance on quality and cost measures.”  (CMS Fact Sheet on Changes for the Physician Value-based Payment Modifier in the CY 2015, October 31, 2014).  Representatives of practices can access the QRURs through the CMS portal using an “Individual Authorized Access to CMS Computer Services” (IACS) account with one of the following group-specific Physician Value (PV) PQRS roles: Primary PV-PQRS group security official; Backup PV-PQRS group security official or PV-PQRS group representative.  You can sign up for a new IACS account or modify an existing account on the IACS website at https://applications.cms.hhs.gov/.  If you have questions about how to register or set up an IACS account please contact the QualityNet Help Desk 1-866-288-8912 or via email at Qnetsupport@hcqis.org from 7 AM-7 PM CST.  Once you have your IACS account information, you can obtain your QRUR at https://portal.cms.gov.  There will be 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 payment adjustment.

With best wishes,

Tony Mira
President and CEO