How the Value Based Modifier will Impact Physician Reimbursement

CMSThe Value-Based Payment Modifier is a CMS-imposed qualifier that provides a differential payment to a physician or group of physicians under the Medicare Fee Schedule based on the quality of care provided compared to cost during a performance period. It will be applied by Medicare in calendar year 2015 to payments for physicians in groups of 100 or more eligible professionals (EP) who submit claims under a single tax identification number. Beginning in 2017, all physicians are expected to be affected. The VBP program is intended to provide comparative performance information to physicians as part of Medicare’s efforts to improve the quality and efficiency of medical care.

The modifier is part of the government’s strategy to promote value over volume. CMS will essentially use the modifier to either penalize physicians for low quality of care or reward them for providing high quality care.

The modifier is not optional. Physicians cannot avoid the Value-Based Modifier by simply electing not to participate in the Physician Quality Reporting System (PQRS).  If physicians don’t report PQRS measures then they will be assigned a negative value modifier. In fact, the best way to prepare for the Value-Based Modifier is to get involved in the PQRS as soon as possible. This is particularly true for solo practitioners and smaller groups.

CMS used 2013 PQRS data when determining 2015 payment impact for groups of 100 or more EPs, and there’s no doubt that they will do the same for all other EPs eventually. If EPs in groups of 100 or more did not participate in PQRS in 2013, these providers will receive a 1% decrease in Medicare in 2015. If these groups don’t report in 2014, their Medicare payment rate will decrease by 2% in 2016. These percentages may be increased over time.

In an effort to align programs, CMS is separating all groups of physicians with 100 or more eligible professionals into two categories based on PQRS participation. The first category of groups of physicians includes those that (a) self-nominated for PQRS as a group and report at least one measure or (b) have elected the PQRS administrative claims option for CY 2013. Groups in this category include those groups that have self-nominated and have met the satisfactory reporting criteria for the PQRS incentive payment. This category’s VBPM will be set at 0 percent.

Within this category, CMS is offering practices an option to calculate the VBPM using a quality-tiering approach. This allows groups of physicians to elect to earn an upward payment adjustment for high performance (high quality/low cost tier) and be at risk for a downward payment adjustment for poor performance (low quality/ high cost tier).

The second category includes groups of physicians with 100 or more eligible professionals that have not PQRS reported in 2013. This includes groups that did not self-nominate to participate in the PQRS GPRO and did not report at least one measure. This category’s VBPM will be set at -1.0 percent in 2015. This downward payment adjustment for the 2015 VBPM will be in addition to the -1.5 percent payment adjustment assessed under the Act for failing to meet the satisfactory reporting criteria under PQRS.

Practices that PQRS report in 2013 and elect quality tiering in 2013 to calculate their VBPM will have the opportunity to earn an upward payment adjustment for high performance (high quality/low cost tier) and be at risk for a downward payment adjustment for poor performance (low quality/high cost tier). VBPM scoring methods focus on how the group’s performance differs from the national benchmark on a measure-by-measure basis.


Low cost

Average cost

High cost

High quality




Medium quality




Low quality




* Eligible for an additional +1.0x if reporting clinical data for quality measures and average beneficiary risk score is in the top 25 percent of all beneficiary risk scores.

The program is required by law to be budget neutral. Since the total sum of downward adjustments is unknown at this time, CMS cannot determine specific upward payment amount percentage. Rather, as shown in the table above, CMS will give groups that provide high quality and low cost care the highest upward adjustment. The value of “x” will depend on the total sum of negative adjustments in a given year. In addition, to ensure that the value modifier encourages physicians to care for the severely ill and beneficiaries with complicated cases, CMS will provide an additional upward payment adjustment for groups of physicians furnishing services to high-risk beneficiaries.

Join Our Newsletter

Get Updates Direct to Your Inbox. Gain access to a rich library of articles, white papers, webinars, podcasts and more. Register today to receive eMDs Insights newsletter.

Specialty *
State *