The future of value-based purchasing

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 - James W. Fasules, MD

Since passage of the Patient Protection and Affordable Care Act (PPACA), the Centers for Medicare & Medicaid Services has progressively implemented requirements that call for value-based purchasing (VBP) in all major payment systems in Medicare. With the Supreme Court’s decision in 2012 and the re-election of President Barack Obama and a Democratic Senate, the PPACA is firmly ensconced as “the law of the land” and all aspects of the VBP programs will move forward.

VBP involves three major elements for physicians: confidential feedback on performance and resource use; public reporting; and a payment adjustment or value modifier. In addition, the final 2013 Medicare Physician Fee Schedule, published in November 2012, sets payment rates and related policies for 2013, includes VBP regulations and many other important decisions relevant to cardiovascular medicine.

Confidential feedback on performance and resource use: Physicians in several states have already received Quality and Resource Use Reports with details on performance and cost measures. In December 2012, physicians in groups of 25 or more in California, Iowa, Illinois, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin received their individual reports. 

CMS intends to have reports sent to all physicians in 2013. These reports include information from the Physician Quality Reporting System (PQRS), quality measures calculated using claims data and cost of care measures for patients seen by the physician. 

Public reporting: CMS has been expanding the existing online Medicare physician directory into a website titled Physician Compare. Modeled after a similar CMS website for hospitals, the directory currently reports if a physician has satisfactorily reported quality measures through PQRS and if a physician received a bonus for electronic prescribing. CMS has not yet announced full details of future expansion of this program, but expect to see reporting of expanded PQRS performance and cost measures in the future.

Payment adjustments/value modifier: Medicare is required to implement a value-based payment adjustment for at least some physicians starting with payments made in 2015. While this seems far off, CMS will be using data from two years earlier to assess physicians, meaning 2013 data will impact 2015 payment. Physicians’ 2015 value-based payment modifier will be calculated and scored using 2013 quality and cost data for their patients. Physicians will continue to be paid based on the same fee-for-service mechanism, but the payment for each service could be adjusted up or down per the VBM.  

CMS has determined it will phase in these value modifier payment adjustments starting with physicians who are in groups of 100 or more professionals who bill Medicare. Under this model, a practice with 80 physicians and 20 nurse practitioners would be considered eligible. CMS will be adjusting payments based on group performance in quality and cost rather than individual performance. 

Quality will be determined partially based on scores from the PQRS.  In fact, groups that do not participate in PQRS will automatically be considered to be providing the lowest level of quality. Other elements of quality will be based on measures that are not reported directly by the physician using claims data. 

CMS will attribute costs of care, at least initially, based on the annual costs of care for patients who receive the most evaluation and management services from a group. Costs will not be assessed based merely on those provided by the group, but will include all costs for services paid by Medicare. The cost of care measures will be risk adjusted based on the age and illnesses of the patients treated by the physician group.

CMS has created a process in which groups can opt-in to make their payments at risk in 2015. Groups must successfully report on PQRS to be eligible to make that decision. If the group does not participate, payments will be reduced by 1 percent in 2015. If a group successfully reports, it can elect one of two options: choose to not have payments adjusted up or down based on value or choose to be part of a tiering program where payments could be adjusted up or down based on the value-based payment modifier. CMS has indicated that payments would not be reduced by more than 1 percent in this plan. The agency has not indicated that there is a maximum bonus opportunity but it likely will be no more than 3 percent or 4 percent. 

If a group chooses to participate