Medicare Pays for Performance: 58 Practices see a 32% Bump in Payments

 In Articles, Meaningful Use, Medicare Quality Programs, PQRS, Value-Based Modifiers

2016 is the first payment year that Medicare’s Value-Based Modifier program (VBM) was expanded to include medium sized practices (10-99 providers). The results provide interesting insights into this program and the likely path of Medicare’s next iteration of Pay for Performance.

2016 payments reflect the quality and cost data for services provided in 2014. A total of 13,818 medical practices were included based on having 10 or more providers who bill to Medicare and not participating in an ACO. Of these 40% (almost 5500) received an automatic pay cut of 4% because they did not successfully report quality measures under the PQRS program. The table below shows how the remaining 8,300 practices fared.

Medicare Pays for Performance - 58 Practices see a 32 percent Bump in Payments

Remember that the VBM program is designed to be budget neutral, so the money saved through payment cuts to the 5500 practices that did not report and those shown in the red boxes is distributed to the small number of practices who had exceptionally high quality or exceptionally low cost.

For 2016, 850 practices with 10-99 providers had poor performance but no payment cuts because it was their first year participating in the program; 59 larger practices received payment cuts due to poor performance, while 128 practices are seeing an increase in their Medicare revenue for this year. The highest payment rate is made to practices that were either low on cost or high on quality AND had a high patient severity of illness score meaning they saw patients that were sicker than the average Medicare beneficiary.

By design, the VBM program rewards and penalizes outliers. The vast majority (88%) of mid-sized and large practices that reported quality measures in 2014 fall in the white boxes and are receiving the standard Medicare allowables on their 2016 claims.

Stay Tuned for a Rough Ride

First, the VBM program expanded in the 2015 reporting period to include practices of all sizes, perhaps doubling the number of eligible practices but with a smaller impact on dollars. The small (< 10 provider) practices have no downside risk in 2017, but we expect that many will have failed to meet the higher PQRS standards (nine measures vs. three in 2014) resulting in substantial dollars available to redistribute to a relatively small number of high performing practices.

As practices learn the details of VBM and adjust their quality reporting approaches in 2016 to avoid penalties from low performance in 2018, we’ll likely see a smaller amount of penalty dollars being spread across a larger number of practices and “incentives” in the 30% range will surely disappear.

And finally, in 2017 the PQRS and VBM programs both officially end but are replaced with MIPS – the Medicare Incentive Payment System – which rolls up composite scores on quality and cost with Meaningful Use and a new component called performance improvement. Each practice will receive a single score between 0 and 100 based on their performance in the four components. CMS will select a threshold and every practice with a score above that threshold will receive an increased reimbursement rate in 2019, while those below the threshold receive a decrease. Each additional point means additional money or additional penalty. For 2019, the maximum penalty is only -4%, compared to a possible -9% in 2017 and 2018. But by 2022, the maximum penalty grows back to -10% with the maximum increase at 30%.

There’s no doubt that healthcare payment models are changing. Rely on MSOC Health as your trusted partner to help you chart your path in the rough seas ahead. Contact Jeanne Chamberlin at 919.442.2422 or J.Chamberlin@msochealth.com to get started.

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