CMS has proposed to begin phasing in a new program under Medicare designed to link physician compensation to the quality and efficiency of the care they provide. The proposal would begin in 2015. The new program may not have much of an impact on Medicare reimbursements to physicians that fall into the “average” category on the quality and cost benchmarks set by CMS, but could result in Medicare reimbursement adjustments of up to +/- 2% for those physicians whose quality of care and/or costs either exceed or fall below those benchmarks.
Large physician groups having more than 100 doctors, nurses, social workers or other health professionals have known for some time that the so-called value-based payment modifier program would commence for them in 2015. However, proposed regulations issued this month by CMS accelerate the application of the value-based payment modifier program to mid-size physician groups with between 10 and 99 health professionals from the original start date of 2017 to 2016. Starting in 2017, all physicians will be subject to the value-based payment modifier program. The payment modifier program does not apply to services provided by non-physician health professionals that are part of a physician group even though those professionals are included for the purpose of determining the physician group size for the phase-in of the value-based payment modifier program.
In response to concerns that the original proposal to cap the payment modifiers to +/- 1% may not provide enough incentive to change physician behavior, the recent regulations proposed by CMS also increase the cap on the payment modifiers to +/- 2%, except that in 2016, mid-size physician groups would be eligible for up to the 2% increase in reimbursements, but would not be subject to the potential 2% reduction in Medicare reimbursements until 2017.
The quality measures used to determine a physician’s applicable value-based payment modifier would vary among the medical specialties, and there are provisions in the recent CMS proposal that give physicians the ability to elect the set of quality measures that their performance will be measured against.
It should be noted that the program is required to be budget neutral, meaning that the aggregate bonuses paid to high performing physicians under the program will have to be offset by an equal amount of reduced Medicare reimbursements for low performing physicians.