Are You Ready for the Transition to Value-Based Purchasing?

The complex world of Medicare reimbursement is about to get even more complicated as CMS moves from a fee-for-service reimbursement plan to value-based payments.

The complex world of Medicare reimbursement is about to get even more complicated, and Patrick Torcson, MD, MMM, SFHM, provided attendees with a detailed roadmap to compliance and maximizing reimbursement at the 2013 Annual Meeting of the Society for Hospital Medicine, held May 17-19 at the National Harbor, Fort Washington, MD. Torcson chairs the SHM’s Performance Measurement and Reporting Committee.

Medicare Part B is the physician payment arm of the Centers for Medicare and Medicaid Services (CMS), and disburses about $110 billion annually in provider reimbursements. As the largest healthcare payer in the United States, CMS effectively sets the national agenda for healthcare payment and policy. Physician reimbursement by Medicaid is transitioning to Value-Based Purchasing (VBP); this change, along with other policy changes, are helping Medicare transform into an actively involved purchaser of health care, rather than just providing passive reimbursement for services billed.

These changes are happening in the face of a currently unsustainable rate of growth in Medicare spending, together with what Torcson deemed “untrustworthy” quality of care, citing work done at GE and Wellpoint. Further, a 2005 study by the Commonwealth Fund found no relationship between quality of care delivered and dollars spent on Medicare patients by state. Thus, payment reform initiatives, which largely predate the Affordable Care Act (ACA), seek to improve value by increasing quality and reducing cost.

The transition from a pure fee-for-service reimbursement plan to value-based payment begins with the Physician Quality Reporting System (PQRS). PQRS is a voluntary system that allows physicians to select three to five measures from among those performance measures identified for a particular specialty. For hospitalist physicians, for example, reportable measures include the percent of eligible patients for whom an advance care plan has been documented, and whether patients with stroke are discharged on antiplatelet therapy.

PQRS reporting can be claims-based, via registry, or through a certified EMR (CEHRT). Quality Data Codes (QDC), which include CPT Category II Performance Codes and G codes, are used to capture the process and outcome of the performance measures, while ICD-9 and E&M codes determine the eligible population to be measured. The current bonus payment level for voluntary PQRS reporting is at 0.5% of total allowable Medicare charges, but beginning in 2015, payments will be adjusted downward by 1.5% for nonreporting, with a negative 2% adjustment in 2016. These quality data which are captured by CMS may be publicly viewable not only at the institutional level, but at the individual provider level beginning at some point in 2013, according to ACA requirements.

Another component of CMS transition to VBP is the generation of Quality and Resource Use Reports (QRURs) for individual providers. These reports, part of the CMS Physician Feedback Program, are designed to provide comparative data on cost of care and quality of care for Medicare beneficiaries. QRURs provide the foundation for the transition to rewarding value rather than just volume of care provided, and provider payments will be adjusted using QRURs beginning in 2015. Currently physicians in five states are receiving QRURs, but during the 2013-2015 period, reporting will be rolled out to all Medicare beneficiaries.

A significant concern expressed by Torcson is that hospitalist physicians are currently grouped with general internal medicine physicians, with the result that average cost per patient and per episode is much higher for the hospitalist cohort. This will have negative impact on VBP reimbursement unless corrected. SHM’s Performance Measurement and Reporting Committee and SHM staff have been communicating with regulators and CMS administrators and have established an open and positive dialog; some adjustment in QRUR cohort comparison is expected before 2015.

In the final transition to VBP, an important consideration is that the pay for performance (P4P) model will be budget neutral -- that is, payment will increase for some but decrease for others. CMS has a goal of achieving lower per-capita growth in healthcare expenditures while increasing quality of care, and sees the P4P model as the “best worst” way to achieve these goals.

By October 15, 2013, physician groups of greater than 100 who share a single Tax Identification Number must self-nominate for the Group Practice Reporting Option (GPRO) PQRS reporting method, and elect to undergo Quality-Tiering Calculation, in order to be eligible for payment adjustment (either up or down) based on quality tiering beginning in 2015. GPRO reporting may be completed via web interface, CMS-qualified registries, or an administrative claims option. Group PQRS reporters may elect not to participate in quality tiering and have no adjustment to payment; non group PQRS reporters will begin to see a 1% downward adjustment in Medicare reimbursement in 2015. Smaller practices will be folded into the VBP requirements during the rollout period, with VBP for all eligible professionals by 2017.

A final Value Modifier Amount is calculated by CMS by aggregating measures related to quality of care (for example, measures of clinical care, care coordination, and patient experience) into a Quality of Care Composite Score. Similarly, total overall costs and total costs for beneficiaries with specific conditions are components of a Cost Composite Score. With value seen as a ratio of quality to cost, the result is a Value Modifier Amount.

In sum, Torcson noted that expert consensus is lacking on the efficacy of a P4P model in enhancing quality and minimizing cost of care, a position supported by a 2011 Cochrane review. The hope is that regardless of the impact of VBP on physician performance, the process of capturing and reporting data about quality and cost will help drive much-needed improvement in the value equation, without undermining physicians’ intrinsically strong drive to excel at the phenomenally complex tasks performed by healers.