VBPPhysicians and healthcare leaders are talking about the move to value-based payment, but there is a lot of confusion about when people will really see changes and what the real financial impact will be. Right now, it is estimated that fewer than 20% of physicians participate in some form of value-based purchasing arrangement. Between now and 2019, all providers paid by Medicare can expect to feel the impact as the Medicare Physician Feedback/Value-Based Payment Modifier Program expands and is then merged into the Merit-Based Incentive Payment System (MIPS) in 2019. These programs are expected to fundamentally change physician fee schedule payments for Medicare.

The Kentucky REC will be rolling out resources in the coming months to help our clients understand the complex “alphabet soup” of value-based purchasing. Our team has identified five potential surprises that await practice leaders as CMS rolls out new value-based purchasing measures for Medicare eligible providers in the coming months.

1. Many practices are going to be surprised as Medicare’s “Value Modifier” really takes off this year and next year.

The Affordable Care Act that mandates that a “Value Modifier” be applied to specific physicians and groups of physicians starting January 1, 2015, and to all physicians and groups of physicians by January 1, 2017. (Please note: This program applies to all physicians paid by Medicare except those groups and physicians participating in the Medicare Shared Savings Program, the Pioneer ACO Model, or the Comprehensive Primary Care Initiative. Federally Qualified Health Centers are also paid differently by CMS). Under this provision, Medicare payments will be adjusted down by as much as four percent (-4%) or up as much as four percent (+4%) over the next few years.

Both cost and quality data are to be included in calculating whether physicians see a performance bump or a reduction due to the Value Modifier. Data reported under PQRS, all cause readmission rates, total per capita cost, Medicare spending per beneficiary, and other factors play a role in the calculation of the Value Modifier.

The catch: physicians may be surprised to find that the Value Modifier for 2016 will be calculated based on PQRS data the practice reported in 2014. And, making changes in quality and resource use today to avoid payment reductions won’t really take effect for two years.

2. If a practice didn’t participate in PQRS, it can expect a payment reduction.

The Physician Quality Reporting System (PQRS) began as a “voluntary” quality reporting program. Some practices may not be aware that non-participation now is going to cost them if they get significant revenue from Medicare. Practices that do not report data to PQRS in 2015 will be subject to a 2% penalty in 2017. It is important to note that this 2% adjustment for non-PQRS reporting is in addition to the Value Modifier adjustment. If a practice is surprised by a payment reduction, they can jump on the PQRS bandwagon. But, like the VBM above, those who report satisfactorily in 2016 won’t see a change in their payment adjustment until 2018.

3. MACRA will greatly accelerate value-based purchasing.

Many physicians breathed a sigh of relief when the Sustainable Growth Rate (SGR) formula was repealed in April through the Medicare Access and CHIP Reauthorization Act (MACRA). What will surprise some clinicians and administrators is how MACRA replaced the SGR cuts. The MACRA legislation mandates that Medicare eligible providers beginning in January 2019 choose between the new Merit-Based Incentive Payment System (MIPS) or an Alternative Payment Model (or APM, such as an ACO or CMS approved program). Medicare providers participating in an APM earn a 5% bonus just for participating, while MIPS providers will have to earn any bonuses they get. The good news is MACRA rolls PQRS, Meaningful Use and the Value Modifier together into the MIPS program, so the “alphabet soup” and differing requirements gets a bit easier. The bad news: providers will have to exceed certain quality, resource use, meaningful use and practice improvement thresholds to be eligible for a bonus from Medicare.

4. Meaningful use is NOT going away. In fact, it is more important than ever.

As the REC, we often hear practice staff say they will be happy when meaningful use goes away. Just to clarify: meaningful use requirements will not go away. The EHR Incentive payments will go away after Stage 3 is reached. Meaningful use of an EHR will endure as a requirement for participation in Medicare and Medicaid. In fact, under the MIPS program mentioned above, meaningful use will be 25% of the composite performance score used to calculate physician bonuses or penalties.

5. Provider performance data will be publicly available for all to see.

Added to the issues of payment above, Medicare providers will increasingly have quality, cost, and other data on their performance reported on’s Physician Compare website, just like hospitals, nursing homes and home health agencies do currently. The web site is a big deal, because it is one of the most recognized sites for information. Right now, not much information is available on Physician Compare. But, that will change as MACRA goes into effect. Consumers will have full access to provider’s performance scores on quality, resource use, meaningful use, patient experience of care and other factors.

While these realities may be a surprise to physicians and mid-level providers who get paid by Medicare, there are resources available to help equip practice leaders to deal with what’s ahead. In our next post, the REC staff will give their top five recommendations for getting ready for value-based purchasing.