Fact Sheets

MEDICARE PHYSICIAN FEE SCHEDULE PROPOSALS FOR PHYSICIAN FEEDBACK PROGRAM AND VALUE-BASED PAYMENT MODIFIER

Added: July 15, 2011

OVERVIEW

On July 1, 2011, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update payment policies and rates under the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2012.  The proposed rule includes proposals that would lay the groundwork for a new value-based payment modifier that would reward physicians for providing higher quality services.  The value-based payment modifier is part of a comprehensive effort across the Medicare program to improve clinical outcomes, improve patients’ experience of care and reduce healthcare costs and spending.  The value-based payment modifier is designed to adjust physicians’ payments by comparing the quality of care relative to the costs of providing that care, and will be risk-adjusted to make sure that physicians are not penalized for treating more severely ill patients.

The value-based payment modifier, which was required by the Affordable Care Act, is to be phased in over two years beginning January 1, 2015, and is to be budget neutral – meaning that the modifier cannot increase or decrease aggregate spending for physicians’ services by more than $20 million over what it would have been without the modifier.  Specifically, the Affordable Care Act requires the payment modifier be applied to payments under the MPFS with respect to physicians and groups of physicians as the Secretary of Health and Human Services determines appropriate beginning on January 1, 2015.  The modifier is to be applied to payments under the MPFS for all physicians and groups of physicians paid under the MPFS not later than January 1, 2017.

CMS is soliciting public comments on the proposed rule and will respond to them in a final rule to be issued by November 1, 2011.  CMS intends to work closely with the physician community to ensure that the value-based modifier fosters improved care for Medicare beneficiaries by rewarding physicians for high quality, efficient care.

BACKGROUND

The proposal for the value-based payment modifier builds on the Physician Resource Use Measurement and Reporting (RUR) Program that was initiated by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) now referred to as the Physician Feedback Program, and expanded by the Affordable Care Act of 2010.  Under these provisions, CMS provides confidential feedback reports to medical professionals and medical practice groups about the resource use and quality of care they provide to their Medicare patients.  The reports quantify and compare patterns of resource use and costs among physicians and physician group practices relative to the performance of similar medical professionals.

In late 2010, CMS launched Phase II of the program, providing confidential Physician Feedback Reports to 36 large medical group practices, each of which had 5000 or more beneficiaries and the groups’ affiliated physicians. In Phase III, late in 2011, CMS expects to further scale up the program and provide confidential feedback reports to the 35 large medical practices that chose to participate in the Physician Quality Reporting System Group Practice Reporting Option (GPRO-1) in 2010 and  also issue feedback reports to individual physicians within the following four states – Iowa, Kansas, Missouri and Nebraska – again drawing on information about quality from the quality measures that were reported by these physicians through the Physician Quality Reporting System augmented by claims-based quality measures, and information on resource use derived from administrative claims data.

IMPLEMENTING THE VALUE-BASED PAYMENT MODIFIER

Developing a Medicare-specific episode grouper:

The Affordable Care Act requires CMS to develop a Medicare-specific episode grouper by January 1, 2012.  The grouper would combine clinically-related health claims data over a defined period of time into an episode of care, such as a hip replacement procedure, including both the procedure itself and any related pre- and post-procedure services.  The proposed rule discusses how CMS plans to test and validate the initial grouper software in 2012, and its plans to include episode-based costs in future Physician Feedback reports once the testing process is complete.  This plan will allow CMS to provide specific information to physicians and groups about episode costs and to gather feedback from them to help shape future refinements and applications of episode-based costs.

Defining quality of care measures:

CMS is proposing to use performance on: (a) the measures proposed to be in the core set of the Physician Quality Reporting System for 2012, (b) all measures proposed for the Group Practice Reporting Option of the Physician Quality Reporting System for 2012, and (c) the core

measures, alternate core, and 38 additional measures in the Electronic Health Record Incentive Program measures for 2012.  CMS is proposing to update these measures next year based on the measures ultimately adopted for 2013.   CMS is specifically seeking comment on:

• whether to include additional measures from the Physician Quality Reporting System in the proposed measures for the value-based payment modifier;

• other potential types of measures to include in the value-based payment modifier including outcome measures and measures of care coordination/care transition, patient safety, patient experience and functional status, as well as the 28 administrative claims measures included in the 2011 Physician Feedback reports; and

• how these measures align with current private sector quality measurement initiatives.

Defining cost measures for the value-based modifier: 

CMS is proposing to use total per capita cost measures as well as per capita cost measures for selected conditions including chronic obstructive pulmonary disease, heart failure, coronary artery disease, and diabetes.  CMS is specifically seeking comment on:

• the use of a Medicare-specific episode grouper and on the use of Diagnosis Related Groups for patients who receive inpatient services; and
• the resource and cost measures used in private sector initiatives and how they are used to profile physicians compared to the quality of care provided.

Initial performance period for the value-based modifier:

CMS is proposing that the initial performance period be the full calendar year 2013 ‑ that is, January 1, 2013 through December 31, 2013 ‑ for purposes of determining the value-based modifier to be applied to CY 2015 payments for the designated physicians and physician groups.  CMS is proposing this performance period because some claims for 2013 may not be fully processed until 2014.

CMS will accept comments on the MPFS proposed rule until Aug. 30, 2011.  CMS will respond to the comments in a final rule to be issued on or about Nov. 1, 2011 that sets forth the policies and payment rates effective for services furnished to Medicare beneficiaries on or after Jan. 1, 2012.

For more information, see: 

http://www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1

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