The Physician Feedback/Value-Based Modifier Program is the latest endeavor of the Centers for Medicare & Medicaid Services (CMS) to optimize the quality of care while minimizing costs. The key component of this new program focuses on the individual physician, using quality data from sources including the Physician Quality Reporting System (PQRS), Physician Compare website and the Physician Feedback Program. This information is combined with cost data from provider payments to determine a composite score.
This latest approach is substantially different from the government’s initial efforts to control quality and safety. After the release of the Institute of Medicine’s 2001 consensus report articulating the vast array of medical errors that occurred on a regular basis, the focus on value and quality turned to the hospital level.(1) Instead of simply paying for a product (i.e., healthcare), Medicare wanted value for the product and began not only defining value but also demanding it through regulations. Although hospitals were encouraged and then required to comply with regulations, physicians essentially remained “off the hook.”
Improving Program Compliance
In 2007, CMS introduced the PQRS, an elective program supported by a small incentive for participation. The goal was to track measures thought to be linked to quality so that patients would have better outcomes for lower costs. Unfortunately, very few physicians bought into the PQRS for a number of reasons:
- Data collection was time-consuming. The Jefferson University physicians began incorporating PQRS very early on, utilizing performance improvement experts to assist in the implementation process. With aggressive resource allocation, they were able to increase their compliance from 43% in 2007 to 94% in 2010. Not all institutions have the resources or the inclination to make such a commitment.
- Questions remained regarding the validity of the data as an accurate reflection of quality care. Studies have not conclusively demonstrated a relationship between participation and improved outcomes.
- The incentive to participate was small at only 0.5% of allowable Medicare charges.
Consequently, CMS made an effort to improve compliance by decreasing the threshold for reporting from 80% to 50% per measure. Furthermore, it added the Feedback Program so that physicians could see how they were doing compared to their colleagues in an effort to motivate them to improve their outcomes. The Feedback Program consists of two components: the Physician Quality and Resource Use Reports (QRURs) and the Value-Based Payment Modifier. Using information from the PQRS, QRURs compare physician performance with that of peers on 28 claims based on quality measures. None of these measures are specifically applicable to critical care, but some apply to inpatient care. Using the cost and quality data obtained, CMS developed and implemented a value-based modifier to calculate physician reimbursement rates. Using PQRS data reported by participating physicians in 2011, the program provided QRURs to large practice groups and individual physicians in nine states in 2012. All groups with 25 or more members will receive QRURs in 2013. These data will be used to calculate the value-based modifier for 2015, and subsequent data will be used to adjust the modifiers each year. The incentive payment of 0.5% of CMS reimbursement is available to PQRS participators through 2014. However, groups and individuals that do not participate in PQRS in 2013 will be penalized 1.5% of CMS reimbursement in 2015. By 2017, all physicians participating in CMS fee for service (not Medicare Advantage) will be affected by the value modifier and non-participation penalties, up to 3% of allowable charges.(2)
Providers will be challenged by several issues: 1) measures are constantly changing; 2) many measures do not reflect quality of care; 3) the ability to obtain meaningful data through electronic records is severely hampered by the lack of operating standards; and 4) recognition of the ability to game this system. Additionally, the ability of financial incentives to improve patient outcome is still unproven. Ultimately, financial implications have become the focus moving forward because of the Affordable Care Act.
Regulations Impact Physicians
One of the key components of the Affordable Care Act, pay for performance, stems from the necessity to be budget neutral. Those providers who demonstrate excellent quality measures and lower costs will receive incentives. The money for these incentives will come from physicians who perform poorly or do not participate. This situation will either encourage competition among providers or build animosity in the medical profession. Subspecialists are already lobbying to protect their reimbursements. This conflict is likely to be exacerbated as escalating penalties begin in 2015.
Probably the greatest challenge of the physician value-based modifier is actually identifying what outcomes and charges are related to a specific physician. Although this may not be insurmountable in the outpatient setting, the inpatient setting has a number of confounders. Consider how many providers participate in a patient’s care during one hospitalization. This number can increase exponentially when the patient requires critical care management. As these providers work synergistically in the patient’s best interest, interventions and decisions from one will influence that of others and, as a consequence, affect overall outcome and cost. Rather than putting providers at odds with one another, a better approach would be to encourage cooperation.
The Group Practice Reporting Option, a web interface, shifts reporting from the individual physician to the group practice and patient population. This type of system meets the requirements for the value-based modifier and gives some physicians an opportunity to avoid experiencing a 1% penalty in 2015 for non-compliance with PQRS in 2013. More importantly, it supports collaboration among providers to optimize care through efficient resource utilization as they are evaluated as a group.(3)
Looking Toward the Future
The Physician Value-Based Modifier has been a long time in the making. A number of regulations and recommendations were created in an effort to help physicians improve patient care and provide it in a more cost-effective manner. Whether physicians approve of additional regulation or not, it is clear that these efforts are not going away and will most likely expand. Physicians are well served to understand the government’s role in reimbursements and gain as much knowledge about the process as possible. In this way, healthcare providers will maintain appropriate compensation for the expertise they provide. Most importantly, they will not be distracted from their ultimate commitment of providing high-quality care for each of their patients.
- Institute of Medicine. Crossing the quality chasm: a new health system for the 21st century. http://www.iom.edu/Reports/2001/Crossing-the-Quality-Chasm-A-New-Health-System-for-the-21st-Century.aspx. Published March 1, 2001. Accessed April 26, 2013.
- Centers for Medicare & Medicaid Services. Medicare FFS Physician Feedback Program/Value-Based Payment Modifier. http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Background.html. Last updated April 17, 2013. Accessed April 26, 2013.
- Centers for Medicare & Medicaid Services. Physician Quality Reporting System: group practice reporting option. https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Group_Practice_Reporting_Option.html. Last updated May 5, 2013. Accessed April 26, 2013.