Value Based Payment

Finding Success in the Physician Feedback Program/Value-Based Modifier

February 11, 2016 10:30 am

In 2015, a total of almost $11.4 million changed hands between the groups receiving positive and negative adjustments.

The Physician Feedback Program/Value-Based Payment Modifier is one of several levers used by the Centers for Medicare & Medicaid Services (CMS) to move the U.S. healthcare system from volume-based payments toward reimbursement that rewards value and outcomes.

By law, the program is intended to be budget neutral, so increased Medicare payments to some practices to award quality will be balanced by decreased Medicare payments to other practices with relatively poorer performance.

Data are still being studied from the program’s initial results, but experts agree that adopting process-improvement systems—such as lean or six sigma—that are customized to the individual nuances of practices are necessary steps to ensure that organizations don’t come up short.

The results also reflect a complex program whose operation is still a work in progress.

Initial Results

There were 1,010 medical groups with more than 100 medical professionals eligible to use their 2013 cost and performance data to calculate a 2015 value-based payment modifier based on where they fit in a cost and quality matrix. 

Only 127 practices chose to participate. And, of those, 21 were found to have insufficient data to correctly calculate their payment modifier and were given a neutral adjustment. Only 14 will receive the upward adjustment (which was calculated as 4.89 percent), while 11 will receive downward adjustments of either -0.5 percent or -1 percent, and 81 will receive no adjustments. An upward bonus of twice the 4.89 percent adjustment was possible, but no participating practices met the high-quality/low-cost criteria to receive that.

The upward adjustment was based on total decreased payments to the 319 practices that did not satisfactorily report for the Physician Quality Reporting System (PQRS)—and were subject to a -1 percent value-based payment modifier adjustment—and the 11 underachieving practices. Those 11 fell into three different boxes on the quality-cost matrix. Seven practices were deemed average cost/low quality and were dinged with a -0.5 percent adjustment, one practice was judged high cost/average quality and also received a -0.5 percent adjustment, and three practices were determined to be high cost/low quality and received a -1 percent adjustment.

Twelve received the 4.89 percent upward adjustment because they were deemed average cost/high quality and two earned it for being found to be in the low cost/average quality box. The 81 receiving the neutral adjustment were determined to be average cost/average quality.

A total of almost $11.4 million changed hands between the groups receiving positive and negative adjustments. Most of that amount came from the practices that were penalized for coming up short on the PQRS. Their reduced payments equaled $10,953,768.

For 2016, groups of 10 or more will be added to the mix. (Groups participating in the CMS shared savings program, Pioneer Accountable Care Organization Model or Comprehensive Primary Care Initiative are not eligible.) While solo and small groups will not be subject to the value-based payment modifier until 2017, 2015 data will be used to calculate their adjustment for that year.

Initial Steps

The “feedback” portion of the program involves the Quality and Resource Use Reports (QRUR) generated by CMS, which identifies group performance based on data reported through the Physician Quality Reporting System.

For that reason, Kent Moore, senior strategist for physician payment at the American Academy of Family Physicians (AAFP), said the “low-hanging fruit” in the process is to successfully report PQRS data and to pay attention to what’s included in the QRUR. For example, the QRUR compares group performance to national benchmarks on measures in domains such as effective clinical care, communication and care coordination, and community/population health.

A few ways to improve group practice performance on the QRUR are to boost influenza vaccination rates in the population health domain, and implement strategies such as pre-visit planning, automatic reminders, and standing orders, Moore says.

Not filing PQRS data subjects groups to a -2 percent Medicare PQRS penalty and a penalty associated with the value-based payment modifier. Thus, reporting PQRS data is closely linked to Medicare payment in two ways. So, Moore said, filing the report “kills two birds with one stone” in terms of penalty avoidance.

See related tool: Checklist to Avoid a Negative Value-Based Payment Modifier Adjustment

Waiting Strategy

Many groups are accepting the penalties determining it’s not worth the administrative burden or because they believe a Republican president will be elected who will roll back quality reporting, said Ellis “Mac” Knight, MD, chief medical officer and senior vice president for the for Alpharetta, Ga.-based Coker Group.

“Value-based reimbursement is something that is happening at a variable rate across the country,” Knight said. “In Atlanta, where I live, fee-for-service still dominates.”

But the passage last year of bipartisan legislation repealing the Medicare sustainable growth-rate formula for physician payment and replacing it with the Merit-Based Incentive Payment System, or MIPS, has signaled that there is no turning back, Knight said. It also signaled that healthcare quality-improvement and cost-reduction efforts are popular on both sides of the aisle.

“Some still hope that this will all go away,” Knight said. “I think that’s foolish.”

MIPS creates a 100-point system that, starting in 2018, will roll together the value-based payment modifiers’ quality data from PQRS for up to 30 points; value-based payment modifier cost- or resource-utilization data for up to another 30 points; performance on meeting meaningful-use health information technology standards, up to 25 points; and clinical practice improvement activities, up to 15 points.

CMS reports that some 209,000 providers will receive -2 percent adjustments in 2016 for failing to meet meaningful-use standards in 2014. MIPS scores will be posted on the CMS Physician Compare website, and it’s hoped that this will motivate more participation.

Necessary Approach

Knight, however, warns against cosmetic practice changes in hopes of boosting a score.

“I suspect many of them will use short-term initiatives of superficial mechanisms to improve their scoring as opposed to developing and embedding systems to improve performance,” Knight said. “To boost patient satisfaction, a lot of practices will put flowers in the lobby, tell staff to smile more, and give them scripts for what to say to patients.”

A RAND Health report supported by the American Medical Association looked at the impact the value-based payment modifier and other alternate payment methodologies were having on physician practices. Though not necessarily linked to the value-based payment modifier, the report noted how some larger groups were excluding certain quality measures from an individual physician’s financial incentive package if they were considered too “far afield” from daily practice. The idea was that these measures could overwhelm a physician and cause poor performance on all measures.

Instead, what’s needed is to develop a systemized approach for measuring outcomes and constant improvement, Knight said. Using existing methodologies such as lean process improvement, six sigma and activity-based costing are fine, but they need to be customized for the individual practice and its patient base.

“People are not widgets,” Knight said. He added another important key: Use true outcome measures such as readmission rates or if patients were able to return to work. The great unintended consequence of quality reporting is that process often gets emphasized over outcomes, Knight said.

Cultural Change

Shari Breuer, a managing director for Chicago-based Huron Consulting Group, also stressed a systematic approach to getting the most accurate adjustment on the value-based payment modifier. But the best results would come from first establishing a culture of continuous improvement on a prospective basis.

Such cultural change includes supporting an expertise infrastructure that values education and training, and integrates process-improvement into the daily workflow—instead of making it something the experts do when they get a spare moment.

Healthcare is being transformed and the new government programs are so complex that “no one person can be an expert,” Breuer said. Organizations can establish experts for certain aspects of the value-based payment modifier program. The person in charge of managing the overall processes involved doesn’t need to be a physician, but a “physician champion” is needed to build peer-to-peer support for the process.

The data used to drive improvement has to be visible and be part of people’s daily conversation, Breuer said. Most practice leaders trust their own internally developed data for quality improvement, but most alternative payment strategies rely on claims data, according to the Rand Health report. So it helps to link clinical process data with business operations data, Breuer said.

A tracking element is needed to ensure that, when patients are referred to an outside specialist, the specialist has all the needed patient information and the practice also needs to know if the recommended treatment was carried out.

“Ultimately, it’s about taking credit for the care you provide, showing how sick your patients are, and justifying the utilization of resources,” Breuer said. “It’s about documenting what you’re doing and how it’s impacting patients.”

Andis Robeznieks is a freelance healthcare writer based in Chicago.

Interviewed for this article: Kent Moore is senior strategist for physician payment at the American Academy of Family Physicians

Ellis “Mac” Knight, MD is chief medical officer and senior vice president for the Coker Group, Alpharetta, Ga.

Shari Breuer is a managing director for Huron Consulting Group, Chicago.

Discussion Starters

Forum members: What do you think? Please share your thoughts in the comments section below.  

  • What key steps has your practice implemented to participate or prepare for the value-based payment modifier?
  • Have you identified any impacts of those steps on your practice’s costs or quality?


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