Q. Does the Centers for Medicare & Medicaid Services intend to change the reimbursement structure for physicians?
A. Yes. On January 26, 2015, CMS delivered a strong message to providers regarding future payments for the care they deliver. Several fact sheets and press releases, including “Better Care, Smarter Spending, Healthier People: Paying Providers for Value, Not Volume,” describe new health-care payment models intended to improve health-care quality and reduce cost.
Q. Is there a structure and timeline to this new payment system?
A. The framework adopted by the Department of Health and Human Services categorizes how payments are made to providers under this initiative. The categories are:
• Category 1–fee-for-service with no link of payment to quality (current system);
• Category 2–fee-for-service with a link of payment to quality;
• Category 3–alternative payment models built on fee-for-service architecture; and
• Category 4–population-based payment.
The description for Category 2 indicates “at least a portion of payments varies based on the quality and efficiency of health care delivery.” The majority of eye-care providers will fall into Category 2 with a small number in Category 3.
HHS expects to have 85 percent of Medicare fee-for-service payments in Category 2 or Category 3 by 2016 and increase this to 90 percent by 2018. HHS cites the immediate need for providers to make changes in day-to-day operations that will improve quality and reduce cost.
Q. How does the Value-Based Payment Modifier fit into the new payment structure?
A. The VBPM is a “shared savings” program and fits into Category 2. The Affordable Care Act mandated that CMS include cost and quality data in calculating physician reimbursements by 2015. The VBPM is a “quality and cost” program. It is the third quality program that affects reimbursements for individual eligible professionals and group practices. The other two programs are Physician Quality Reporting System and the Electronic Health Record programs. The VBPM links directly to the PQRS program and rewards or penalizes providers for the quality and cost of care provided. No registration or specific attestation for VBPM is required and no exemptions apply.
Q. Who is included in the VBPM program?
A. The VBPM program includes all eligible professionals. The Social Security Act defines eligible professionals and includes physicians and non-physician practitioners. Within eye care, they include: ophthalmologists; optometrists; osteopaths; physician assistants; nurse practitioners; anesthesiologists; CRNAs; and audiologists (for those eye-care practices that offer hearing services).
Q. How is the cost component calculated?
A. The cost composite score equally weighs two costs. The first cost is the total per capita cost for patients; it includes payments under Medicare Parts A and B. The second cost is the per capita cost for beneficiaries with diabetes, coronary artery disease, heart failure and chronic obstructive pulmonary disease. The process used to assign the per capita cost per patient is the same process used to assign beneficiaries to Medicare Shared Savings Accountable Care Organizations. The majority of beneficiaries will be “assigned” to primary-care providers. However, it is possible that some will be assigned to specialty-care providers if the beneficiary received the majority of primary-care services from other eligible professionals.
Q. How will a provider be analyzed?
A. The simple analysis of the program indicates that eligible providers successfully participating in the PQRS program and considered high-quality and low-cost providers will be eligible for a VBPM bonus. The VBPM applies at the Tax Identification Number level of an individual or a group practice.
Q. What is the value of the bonus?
A. Currently the value of the bonus is unknown because the program must be budget-neutral; positive adjustments to those eligible must be offset by negative adjustments to others, and the bonus cannot be calculated until the end of the PQRS reporting period.
Reimbursement adjustments, both upward and downward, associated with the VBPM by CMS will be phased in from 2015 to 2017. Reimbursement adjustments affect only physician payments under the Medicare Physician Fee Schedule. It applies to Medicare paid amounts, so co-insurance amounts are not affected.
Q. When do the payment adjustments begin?
A. Payment adjustments are based on participation two years prior to the year in question. Utilizing 2014 data, groups of 10 or more will be analyzed on their cost and quality to determine if they are statistically better, the same or worse than the national average. In 2016, groups of 10 or more will receive either a positive or neutral payment adjustment based on their 2014 performance. Group practices of 10 or more providers who were not successful with PQRS in 2014 will be assessed a 2-percent reduction for both VBPM and PQRS in 2016.
In 2015, all providers are subject to the VBPM. Performance in 2015 affects reimbursements in 2017. Failure with PQRS in 2015 results in a 2-percent PQRS penalty and a 2- to 4-percent VBPM penalty, depending on the size of the practice, in 2017.
Q. Is there an accessible report that contains practice-specific feedback associated with the VBPM?
A. Quality Resource and Use Reports, also known as Physician Feedback reports, contain quality- of-care and cost performance rates on measures that will be used to compute the VBPM. To access your report, you can log in to the CMS Enterprise Portal with an Individuals Authorized to Access the CMS Computer Services (IACS) account. The 2013 reports are currently available; they provide information as to how you rate under the VBPM. The 2014 interim reports were released in April 2015 and contain cost information for 2014 but do not contain quality data.
Q. Why are changes to the existing reimbursement model necessary?
A. The existing fee-for-service methodology is not sustainable. According to the 2014 Trustee Report, the Medicare Hospital Insurance Trust Fund will be depleted by 2030. Initiatives that move away from the fee-for-service method to alternative payment methods are the goal of HHS and private payers. The VBPM is one component of the new payment framework affecting the future of reimbursements.
Ms. McCune is vice president of the Corcoran Consulting Group. Contact her at DMcCune@corcoranccg.com.
