Value-Based Payment Modifier: 2016 Medicare Physician Fee Schedule

In late October, the Centers for Medicare & Medicaid Services (CMS) issued 2016 Medicare Physician Fee Schedule Final Rule updating payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2016. CMS finalized a number of new policies including a set of provisions designed to provide a smooth transition from the Value-Based Payment Modifier (Value Modifier) to MIPS. We will review those provisions in this post.

The Value Modifier provides for differential payments under the PFS to physicians, groups of physicians, and other eligible professionals (EPs) based on the quality and cost of care they furnish to beneficiaries enrolled in the traditional Medicare Fee-for-Service (FFS) program.

Under the program, performance on quality and cost measures can translate into increased payment for physicians and other EPs who provide high quality, efficient care and decreased payment for low-performing physicians and other EPs who underperform. The Value Modifier is set to expire at the end of CY 2018 and will be replaced by a new program called Merit-based Incentive Payment System (MIPS). MIPS was established when Congress enacted the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) in late March of 2015.

The policies established in the latest PFS ruling are intended to help provide a smooth transition from the Value Modifier to MIPS. CMS is finalizing the following key provisions:

  • To apply the Value Modifier to non-physician EPs who are Physician Assistants (PAs), Nurse Practitioners (NPs), Clinical Nurse Specialists (CNSs), and Certified Registered Nurse Anesthetists (CRNAs) (and not to other non-physician EP types) in groups and to PAs, NPs, CNSs, and CRNAs who are solo practitioners, in the CY 2018 payment adjustment period;
     
  • To apply the quality-tiering methodology to all groups and solo practitioners that meet the criteria to avoid the downward adjustment under the PQRS. Groups and solo practitioners would be subject to upward, neutral, or downward adjustments derived under the quality-tiering methodology, with the exception that PAs, NPs, CNSs, and CRNAs in groups consisting of non-physician EPs and PAs, NPs, CNSs, and CRNAs  who are solo practitioners will be held harmless from downward adjustments under the quality-tiering methodology in CY 2018;
     
  • To continue to set the maximum upward adjustment under the quality-tiering methodology for the CY 2018 Value Modifier at: +4.0 times an adjustment factor (to be determined after the conclusion of the performance period), for groups of physicians with ten or more EPs; +2.0 times an adjustment factor, for groups of physicians with between two to nine EPs and physician solo practitioners; and +2.0 times an adjustment factor for groups that consist of non-physician EPs and solo practitioners who are PAs, NPs, CNSs, and CRNAs; and
     
  • To set the amount of payment at risk under the CY 2018 Value Modifier to -4.0 percent for groups of physicians with ten or more EPs, -2.0 percent for groups of physicians with between two to nine EPs and physician solo practitioners, and -2.0 percent for groups that consist of non-physician EPs and solo practitioners who are PAs, NPs, CNSs, and CRNAs.
     
  • To waive application of the Value Modifier for groups and solo practitioners, as identified by their Taxpayer Identification Number (TIN), if at least one EP who billed for PFS items and services under the TIN during the applicable performance period for the Value Modifier participated in the Pioneer ACO Model, Comprehensive Primary Care Initiative (CPCI), or other similar Innovation Center model (such as Comprehensive ESRD Care Initiative, Oncology Care Model (OCM), and the Next Generation ACO Model) during the performance period, beginning with the CY 2017 payment adjustment period;
     
  • To use CY 2016 as the performance period for the CY 2018 Value Modifier and continue to apply the CY 2018 Value Modifier based on participation in the PQRS by groups and solo practitioners;
     
  • Beginning with the CY 2017 payment adjustment period, we are increasing the minimum episode size for the Medicare Spending per Beneficiary measure to be included in the Value Modifier to 125 episodes for all groups and solo practitioners.  Also, beginning with the CY 2017 payment adjustment period, for solo practitioners and groups with two to nine EPs, we are finalizing that the All-Cause Hospital Readmissions measure will not be used in the quality composite calculation for the Value Modifier.  These changes are being made to be consistent with our policy to only use measures that have moderate to high reliability.
     
  • To not apply the automatic downward adjustment applicable to TINs that do not meet the criteria to avoid the downward adjustment under PQRS, when PQRS determines on informal review that at least 50 percent of the TIN’s EPs meet the criteria to avoid the downward PQRS payment adjustment.  Also, we note that if the group was initially determined to have not met the criteria to avoid the PQRS downward payment adjustments and consequently was initially subject to the automatic downward adjustment under the Value Modifier, then we do not expect to have data for calculating their quality composite, in which case they would be classified as “average quality.”

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