Update for Anesthesiologists on the Value Based Payment Modifier
CMS released the Final Medicare Fee Schedule Rule for 2016 on October 30, 2015. The November 9th issue of F1RSTNews discussed the conversion factors for anesthesia ($22.4426) and for other services ($35.8279) and some of the changes to the measures and registry options for the Physician Quality Reporting System (PQRS). The final rule addresses a number of other matters of interest to anesthesiologists and pain physicians. In this issue, we will summarize developments concerning the Value Based Payment Modifier (VM).
The VM adjusts Medicare fee-for-service payments either upward or downward by assessing both the quality of care and the cost of the care provided, as explained in our November 3, 2014 Alert What Anesthesiologists Need to Know about the Value-Based Payment Modifier. It is an adjustment made on a per claim basis to Medicare payments for physician services. It is applied at the Taxpayer Identification Number (TIN) level to physicians (and beginning in 2018, to non-physician Eligible Professionals [EPs]) billing under the TIN.
Required under the Affordable Care Act, the VM began to be phased in in 2015 (based on 2013 performance). It will be fully implemented in 2017 and will continue in effect through 2018—and then will be phased out again and replaced by the Merit-Based Incentive Payment System (MIPS) in 2019.
The VM program aligns with the PQRS and includes a payment adjustment based on PQRS reporting: EPs who do not satisfactorily report enough PQRS measures to avoid the PQRS penalty will receive an additional penalty under the VM program. For EPs who avoid the PQRS penalty, CMS determines the VM through a quality-tiering process using PQRS participation information, CMS-calculated outcomes related to hospital readmissions and hospital admissions for certain chronic and acute conditions, and also certain cost measures to assign two composite scores to each medical group: a quality composite and a cost composite. Each score will be classified as “high,” “average” or “low” based on a comparison to national averages. 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. In payment year 2018, the maximum bonus for high-quality/low-cost performers will be 4.0x, x being the upward adjustment payment factor. The upward adjustment payment factor will be determined in budget neutral fashion by the aggregate amount of penalties imposed on low-quality/high cost practices. The maximum penalty for high-cost/low quality providers will be -4 percent.
The gradual implementation of the VM has been based on the number of EPs in the practice. Only groups with 100 or more EPs are receiving payment adjustments this year. In 2016, the VM will affect payment to groups with 10 or more EPs, based on their performance in 2014. CMS will begin to apply the VM to payments to all physicians, including those in solo practice, in 2017 reflecting their performance in 2015. The Final Rule expands on the types of EPs included in the program by finalizing a proposal to apply the VM to certified registered nurse anesthetists (CRNAs), nurse practitioners, physician assistants and clinical nurse specialists. The table below shows the evolution of the maximum adjustments allowed per year, the group sizes and the EPs to which they apply:
Maximum Payment Adjustments Per Year, Per Group Size and Per Type of EP
Thus,
- All group practices and solo practitioners will be subject to upward, neutral or downward adjustments derived under the Value Modifier quality-tiering methodology, except group practices comprised solely of nonphysician providers (NPPs). NPPs who are solo practitioners will be held harmless from downward adjustments.
- The maximum upward adjustment under the quality-tiering methodology shall be +4.0 times an adjustment factor (to be determined after the conclusion of the performance period) for groups with ten or more professionals, and +2.0 times an adjustment factor for all other groups and solo practitioners.
- The maximum downward adjustment for 2018 shall be -4.0 percent for groups with ten or more professionals and -2.0 percent for all other groups and solo practitioners (with the exception of NPP-only groups and NPPs who are solo practitioners).
- For all groups and all EPs, being classified as “average quality/average cost” will produce a 0.0 percent VM adjustment. For further detail of the potential adjustments by group size and type of EP, MGMA members may consult the MGMA’s Exclusive Analysis of the 2016 Medicare Physician Fee Schedule. MGMA’s The Value-Based Payment Modifier: How to Prepare Your Practice, written in December 2014, is an excellent introduction to the VM program.
Most anesthesiologists and CRNAs are unlikely to be tiered as anything but average on either quality or cost. The PQRS measures that they report are just part of the composite quality score. The other components are:
- Composite of rates of potentially preventable hospital admissions for three chronic conditions: heart failure, chronic obstructive pulmonary disease and diabetes;
- Composite of rates of potentially preventable potentially preventable hospital admissions for three acute conditions: dehydration, urinary tract infections and bacterial pneumonia, and
- All-cause readmissions within 30 days of discharge from an acute care hospital.
For any of these outcome measures to apply, the clinician or the clinician’s group must have furnished a plurality of the beneficiaries’ primary care services and there must be a minimum of 20 attributable cases. Similarly, for two of the three cost measures, CMS will use a minimum case size of 20 and the attribution process that assigns a beneficiary to the TIN providing more primary care services to that beneficiary than any other TIN. These two cost measures are:
- Total Part A and Part B per capita costs for all Medicare patients, and
- Total Part A and Part B per capita costs for patients with specific conditions (heart failure, coronary artery disease, chronic obstructive pulmonary disease and diabetes).
The third cost measure is CMS’s evaluation of the “Medicare Spending Per Beneficiary” (MSPB), which covers the Part A and Part 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—but the TIN must have 125 or more MSPB episodes for the measure to be included in the cost composite, and again, few if any anesthesia groups will meet this requirement.
There is not much, therefore, that anesthesiologists or CRNAs can do to affect their quality-tiering under the VM next year. They can and should try to ensure that they report satisfactorily under the PQRS program to avoid the penalties: -4 percent under the VM plus -2 percent adjustment under the PQRS itself, or a total of -6 percent for groups of 10 or more EPs, and -2 percent (VM) plus -2 percent (PQRS), or a total of -4 percent, for smaller groups including at least one physician. All EPs who do not successfully participate in the PQRS in 2016 will receive a -2 percent adjustment.
The VM and PQRS programs have both become hopelessly complex, in our opinion. Individual physicians’ and groups’ Feedback Reports and Quality and Resource Utilization Reports (QRURs), which should help physicians to understand and improve their performance, are full of inconsistencies and errors; this has led CMS to extend the deadline for filing informal appeals several times, the latest being December 16, 2015. Extending the deadline to appeal is not enough, as many physicians are not aware that they are facing significant Medicare payment reductions that they could, and should, contest. In a letter dated December 1, 2015, the American Medical Association pointed out the communications and analyses flaws in CMS’s calculations of penalties to be applied to 2016 payments, and it called upon CMS Acting Administrator, Andrew M. Slavitt to apply a broad “hold harmless” policy that would automatically exempt all physicians who attempted to comply with the 2014 PQRS requirements from any PQRS or VM penalties in 2016. Such is, unfortunately, the state of the PQRS and VM programs.