What Healthcare Providers Need to Know About Medicare Physician Performance Assessment From 2014 to 2016

For the last 40 years, CMS has been slowly transforming itself from a passive payer to an active purchaser of health care.First there were charge controls (e.g. assignment) and then utilization controls (e.g. SGR), and now there is an active push for performance assessment.

Physician performance assessment is mandated by several newer federal statutes, including the Patient Protection and Affordable Care Act. Performance will be assessed through the Physician Quality Reporting System, and the incentives and penalties will be administered through both the PQRS and the Physician Value-Based Payment Modifier program.

In 2006, CMS implemented the PQRS and attempted to entice physicians with incentive payments of 1.5 percent for successful participation; however, participation in the PQRS has fluctuated at only around 25 percent. For that reason, CMS will eliminate the PQRS incentives this year and implement several penalties starting next year. These penalties will span several different programs, all with different rules. The penalties will initially only affect large groups but will extend to all physicians in 2017.

The 2014 Medicare physician fee schedule final rule discusses in detail many of these changes.1 Like last year, successfully reporting PQRS measures will not only result in an incentive in the current year but will also eliminate a penalty two years later. Physicians who successfully participate in PQRS in 2014 will receive a 0.5 percent update this year, avoid a 2 percent penalty in 2016, and avoid a VBM penalty of 2 percent if they are in a large group.

CMS has established different reporting requirements for individual physicians and group practices. Successful participation requirements for incentives differ from requirements for avoiding penalties. In general, it is easier to avoid the 2016 penalty than to receive the 2014 incentive; however, qualifying for an incentive allows the individual or group practice to avoid the penalty. CMS has published some excellent materials on implementing the 2014 PQRS on its website.2

The 2014 PQRS will contain a total of 287 measures and 25 measures groups in 2014. CMS is adding 57 new individual measures and two measures groups to fill existing measure gaps and plans to retire a number of claims-based measures to encourage reporting via registries and EHRs. Each measure group will have a minimum of four measures, and CMS intends to increase this to six in the next few years. To align the PQRS with the Medicare EHR Incentive Program, all clinical quality measures available for reporting under the Medicare EHR Incentive Program will be included in the 2014 PQRS.

In general, CMS will now require physicians to report at least nine measures covering at least three of the National Quality Strategy domains on at least 50 percent of their patients.3 If a physician does not have nine applicable measures to report, they must report on as many measures covering as many domains as possible.

Unfortunately, most specialties do not currently have nine measures that cover three NQS domains, and the process for developing new quality measures is complicated, time consuming and expensive. For this reason, CMS has developed a measure application verification process for those physicians who report less than nine measures to determine if they were capable of reporting more measures in order to avoid any penalties.

Physicians have many options for participation. They may participate as individuals even if they are in a group; they can report either individual measures or measure groups; they can utilize CG-CAHPS for 1 domain's measures; and they can report via claims, registries and EHRs. Measure groups can only be reported through qualified registries.

In addition to the PQRS, the VBM is a new budget-neutral performance assessment program that is mandated by the PPACA and begins in 2015. The VBM's goal is to financially reward physicians who provide health care that is high value, or both high in quality and low in cost. CMS will utilize PQRS performance measures with a two-year lag and then develop cost measures to determine upward, downward and neutral adjustments based on physician performance. These adjustments will start at 1 to2 percent and will likely increase with time to a maximum of 10 to 12 percent in future years.

Physicians in groups of 100 or more will be subject to the VBM in 2015. Based on their performance in calendar year 2013, physicians in groups of 10 or more will be subject in 2016, and all physicians will be subject in 2017. Groups must have at least 50 percent successful participation among all of their providers, including non-physicians. The VBM does not apply to groups of physicians in which any of the group's physicians participate in Medicare accountable care organizations or the Comprehensive Primary Care Initiative.

Currently, applicable cost measures do not exist for physicians but do for hospitals under the Hospital Value-Based Purchasing program. One such HVBP measure is Medicare spending per beneficiary. CMS is proposing that the MSPB measure be utilized in the VBM in 2016. This measure captures all Medicare Part A and Part B payments during an MSPB episode during the three days prior to a hospital admission through 30 days after discharge with certain exclusions and adjustments.

CMS believes that inclusion of the MSPB measure in the VBM program will help to align incentives, promote coordination of care and improved efficiency across hospitals and the physician groups who practice in them. The ultimate goal is clearly a payment system based on value of services rather than the volume of services.

Dr. Trytko is an anesthesiologist in Spokane, Wash. He is chair of the Washington Medicare Carrier Advisory Committee, an American Medical Association delegate and a member of the American Society of Anesthesiologists Committee on Economics.

1Centers for Medicare and Medicaid Services. Details for Regulation #: CMS-1600-P.  http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices-Items/CMS-1600-P.html.Accessed on Dec 31, 2013.

2  Centers for Medicare and Medicaid Services. 2014 Physician Quality Reporting System (PQRS) Implementation Guide. http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/MeasuresCodes.html.  Accessed on December 31, 2013.

3 Centers for Medicare and Medicaid Services. CMS Quality Strategy. http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html  Accessed on December 31, 2013.

More Articles on Physician Assessment:
CMS Pays $520M in Incentives for Physician Quality Reporting, E-Prescribing  
CMS Creates Timeline for Quality Reporting Alignment  
CMS Seeks Information on Aligning Physicians' Quality Measures 

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