Physician Practice

Taking quality into account for physicians with the value modifier

Physician Practice Insider, June 14, 2016

The value modifier (VM) is Medicare’s physician pay-for-performance program that rewards or penalizes physicians for the quality and cost of care they provide.

For calendar year 2015, Medicare began applying the VM to professional fees paid under its Physician Fee Schedule for physicians in groups of 100 or more providers.

That year, 14 of 106 groups received an upward adjustment of 4.89% to their fees, and 11 groups were penalized with a 0.5%–1% downward adjustment. The 319 groups who did not report quality measures to Medicare were penalized 2.5%.

For 2016, 13,813 physician groups of 10 or more were subject to the VM. Of these, 5,418 groups were penalized the maximum downward adjustment of 4% in their fee schedule because they did not participate in Medicare’s Physician Quality Reporting System (PQRS). Of the remaining 8,395 groups that did report to PQRS, 70 received an upward adjustment of 16% and 58 received a 32% increase. No group qualified for the maximum possible upward adjustment of 48%. There were 59 groups penalized with a downward adjustment in their fees of 1%–2%.

The VM adjustment employs a two-year look-back period, so performance in 2014 determined the VM for 2016. Medicare will apply the VM in 2017 to all physicians in solo or group practice. Similarly, performance in 2015 will determine the 2017 VM, and performance in 2016 will determine the 2018 VM; that means this year, 2016, is the year for immediate action.

Eligibility for VM rewards depends on participation in Medicare’s PQRS. Solo and group practices who did not participate during 2015 will be penalized with a 1%–2% reduction in fees for 2017; they will be penalized with a 2%–4% reduction for 2018 for non-participation during 2016.

Physicians who are members of a group filing claims under a single taxpayer identification number (TIN) that includes primary care physicians are subject to the VM fee schedule adjustment. The VM adjustment of an entire group depends on the performance of only its primary care physicians, who are graded on the quality and cost of care of their patients based on all claims filed during the year by all providers who saw the patient during that year.

Even if providers do not file outpatient primary care claims or are not members of a group that includes primary care providers, they are subject to the PQRS participation requirements, and their diagnostic documentation affects the performance of any other individual or group-practice primary care providers. Those individual practitioners and groups depend on precise documentation by all providers filing inpatient and outpatient claims during the year that accurately reflects the true severity of illness of, and complexity of care provided to, their patients.

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