SAN DIEGO – Starting in 2017, all physicians who participate in Medicare will be paid based on the quality and cost of the care they provide.
The Physician Value-Based Payment Modifier program will compare physician performance on quality and cost and will divide physicians into quartiles, with the top performers designed as "high-quality, low-cost" providers and poor performers as "low-quality, high-cost" providers.
Dr. Patrick Torcson
"This is true physician-level pay for performance," Dr. Patrick Torcson, chair of the Society of Hospital Medicine’s Performance Measurement and Reporting Committee, said during the organization’s annual meeting.
The program, which was authorized by Congress in 2008 and expanded under the Affordable Care Act, is budget neutral, meaning that physicians who provide the "high-quality, low-cost" care will earn the most, while others will earn less.
"There’s no new money coming into the system," Dr. Torcson said. "We’re going to have to compete with each other and with our other specialty colleagues to maintain our same level of reimbursement."
For example, Dr. Torcson, who is the director of hospital medicine at St. Tammany Parish Hospital in Covington, La., said that Medicare currently reimburses him and other hospitalists in his area $186.19 for a CPT code 99223 (level 3, initial admission), regardless of the quality and costliness of the care they provide. Under the new program, officials at the Centers for Medicare and Medicaid Services would use a value-based modifier to designate where physicians are on the value scale. Using one possible scenario of placing 10%-12% of reimbursement at risk, Dr. Torcson estimates that a high-quality, low-cost physician would then earn about $206.19 for that visit, whereas a low-quality, high-cost physician would earn $166.19.
"In effect, this value-based payment modifier is going to be branding physicians, and the best in class is going to be that high-quality, low-cost provider," he said.
Although CMS officials won’t be applying the value-based modifier to all physician claims until 2017, they will first test the model in 2015 on about 56,000 physicians in group practices in Iowa, Nebraska, Kansas, and Missouri. And in 2013, the CMS will begin the collecting cost and quality data that will be the basis of rating that group, Dr. Torcson said.
With the initial measurements to set the value-based modifier beginning next year, Dr. Torcson advised physicians to start preparing now. The first step, he said, is to begin participating in Medicare’s Physician Quality Reporting System. The PQRS program is currently a voluntary, pay-for-reporting system in which physicians can earn a small bonus payment on their total Medicare allowable charges if they successfully report on a certain number of performance measures. This year, for instance, physicians can earn up to a 0.5% bonus. That’s about $733 for the average hospitalist, Dr. Torcson said.
But starting in 2015, the bonus will be replaced with a penalty. Physicians who don’t participate will face a 1.5% cut to their Medicare charges. In 2016, the penalty will rise to 2%.
Dr. Torcson said he’s concerned that physicians are putting off participating in the program because of the small incentives currently available, and that they will be unprepared in 2015 when penalties begin.
Another building block in the progression to pay for performance within Medicare is the Physician Feedback Program. Dr. Torcson said this is another critical area that physicians should watch carefully. Under this program, which was established by Congress in 2008, the CMS uses claims data to provide confidential feedback reports to physicians about the cost and quality of the care they are providing. The reports, also known as Quality and Resource Use Reports (QRURs), went out to about 1,600 physicians in 2009. This year, 56,000 physicians in group practices in Iowa, Nebraska, Kansas, and Missouri will receive reports. Between 2013 and 2015, the CMS will begin sending the feedback reports to all Medicare physicians around the country.
The Physician Feedback Program is important, Dr. Torcson said, because it is the framework CMS will use for value-based purchasing.
Dr. Torcson advised physicians to get used to being measured and to develop a better understanding of quality data. But the most important thing to do to get ready for physician value-based purchasing will be to continue to focus on professionalism and taking excellent care of patients, he said.