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New CMS Initiative to Afffect Physician Pay in 2015
What You Can Do Now

Neurologists' performance on dozens of quality and cost measures in 2013 will influence their Medicare fees in 2015, courtesy of the government's Value-Based Payment Modifier (VBPM) Program.

The program is complicated and confusing, but physicians cannot afford to ignore it. The initiative, which will prompt the Medicare program to pay some physicians more than others, is mandated by the Patient Protection and Affordable Care Act (ACA).

“That means that if you are performing with lower quality or higher cost of care — and you are an outlier in the wrong direction — you are going to be losing money that will be applied to other physicians that are providing better care at a lower cost,” said David A. Evans, chief operating officer at Texas Neurology in Dallas.

Primarily using Medicare claims data, the Centers for Medicare & Medicaid Services (CMS) will compare physicians on 41 quality measures and five cost measures. The scores assigned to each physician reflect not just his or her own services to patients, but also the services provided by other physicians who were involved in their patients' care.

Neurologist Michael Kitchell, MD, one of the first physicians in the country to see the CMS assessment of his performance, found that, on average, his patients are treated by 13 other physicians, all of whom influenced his scores.

“It's your medical neighborhood that they are measuring, including the primary care doctors and other specialists who have something to do with those quality measures, and of course, the total cost of those patients' care,” said Dr. Kitchell, chairman of the McFarland Clinic in Ames, IA. “And every physician has a little bit of a role in those quality measures and the accumulations of cost for the patient care.”


CMS has been moving toward value-based purchasing for nearly a decade. Its early efforts focused on hospitals, starting with the Hospital Compare website that publicly displays hospital performance on dozens of quality measures. Beginning this October, CMS will make incentive payments to hospitals that reflect their performance on some of those measures.

CMS is putting special emphasis on quality measures that affect the cost of health care. Hospitals that have higher-than-average readmission rates for certain patients will see their Medicare inpatient payments cut by 1 percent beginning this October, and the penalties grow in subsequent years.

In 2007, CMS turned its attention to physicians when it introduced the Physician Quality Reporting Initiative — now known as the Physician Quality Reporting System (PQRS) — which offered physicians a bonus if they reported certain quality measures.

UNDER THE NEW CMS QUALITY REPORTING INITIATIVE, physicians will be compared on 41 quality measures and five cost measures using primarily Medicare claims data.

The VBPM program builds on PQRS in that it ties pay to quality measurement. Like many other specialties, neurologists have been slow to embrace that program so CMS cannot rely on physician-reported quality data to support pay-for-performance.

Dr. Kitchell wants physicians to participate in PQRS so the government has accurate data to work with. “I recommend that every neurologist in this country start doing this,” he said. “We need to get with the quality program.”


In its first step to implementing the value-based modifier program, CMS in April sent performance reports to physicians in four Midwestern states and asked for their feedback.

A proponent of pay-for-value who has testified about it before the Institute of Medicine, Dr. Kitchell thinks the CMS goal of rewarding physicians on cost and quality is appropriate — but the current approach is not workable. He believes CMS can use PQRS data to accurately assess the performance of a group of physicians, but it cannot use claims data to accurately assign specific services to individual physicians.

“They simply look to see whether the patient had a bill sent in for lipid levels or a mammogram or a certain drug,” he said. “These administrative claims measures are mostly for primary care processes, and fail to measure actions of most specialists. They are vague with regard to attribution of care, for example, which of the 13 other physicians who treated my patient deserves credit or blame?”

In addition to 41 quality measures, most of which are not related to neurologic care, the Physician Quality and Resource Use data reports on the total cost of a patient's care and the cost for four chronic conditions such as congestive heart failure and diabetes. Dr. Kitchell's performance was compared to that of neurologists in Iowa, Kansas, Missouri and Nebraska.

McFarland Clinic was one of 35 large medical groups that participated in the CMS Group Practice Reporting Option, which uses a medical group's PQRS data last year. “I don't want to toss this whole value-based payment out the window. I just want it to be accurate to the level of where it could be accurate, and that's at the group practice level,” he said.


CMS intends to phase in the value-based payment modifier for physician pay beginning in 2015 — based on their performance in 2013. According to the current timeline, most physicians who treat Medicare patients are to have their claims adjusted by the modifier by 2017.

Of course, many proposed health care regulations get delayed from CMS' announced plans. AAN Director of Medical Economics Amanda Becker said neurologists cannot count on a last-minute reprieve.

“I think we always have to operate under the assumption that the timeline will hold,” she said.

If the Supreme Court throws out the entire ACA, the value-based payment modifier initiative will be dead.

However, the PQRS program will remain in effect and failure to participate will become more costly to physicians in the future. Neurologists who successfully report to PQRS will receive a .5 percent bonus on their Medicare claims each year through 2014; beginning in 2015, those who do not report will see a 1.5 percent penalty that grows to 2 percent in 2016.

Meanwhile, the Electronic Health Record (EHR) Incentives Program will also hold, regardless of ACA's fate. The incentives currently in effect go away in 2015, when physicians who have not met the “meaningful use” criteria will receive a 1 percent reduction in Medicare payments. Penalties will increase by 1 percent every year after that to a maximum of 5 percent.


In addition to helping physicians avoid financial penalties, participation in PQRS and the EHR program will help neurologists succeed in the VBPM program, Evans said.

“Number 1: Get involved with PQRS,” Evans said. “That's the best thing you can do. Try to implement it starting in January.”

The CMS implementation guide for the 2012 PQRS program is on the Academy's website at Gregory J. Esper, MD, MBA, director of general neurology at the Emory Clinic, presented a free webinar, “Incentive Programs and Penalties: What Do They Mean For My Practice?” that is available on the site as well.

Equally important is to fully implement EHR technology and work toward meeting CMS “meaningful use” criteria. In addition to making your practice eligible for financial incentives, use of the technology can identify how to improve your practice.

“EHR implementation is equally important so you can assess your own outcomes on value and quality in a broader view than PQRS, which is limited to defined metrics,” Evans said.

If that seems daunting, physicians in solo or small group practices should align themselves with other physicians — possibly through an independent practice association — to prepare for the coming changes.

“They can help you with getting your EHR going, and they can also help you to improve the processes, improve the quality, and reduce the cost of the care you provide,” he said. “If neurologists think they're going to stay solo and still have paper charts, well, good luck.”