Medicare modifier could hit unsuspecting doctors with pay cuts

Large physician practices will be graded on quality and efficiency in 2013 with little warning about how to achieve value-based bonuses, the AMA contends.

By Charles Fiegl amednews staff — Posted Sept. 17, 2012

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Hundreds of thousands of physicians will have their 2015 Medicare payments adjusted either up or down by a value-based modifier to account for the quality and cost-effectiveness of the care they provide in 2013. Organized medicine groups, however, say doctors will be left with too little time to make the changes that might be necessary to excel under the new payment model.

The Centers for Medicare & Medicaid Services has proposed applying the value-based payment modifier to all physicians practicing in medical groups with 25 or more practitioners. The modifier will adjust 2015 Medicare rates through a scoring system that could raise pay by as much as 2% or cut it by as much as 1%. Those caring for sicker patients who score high enough also could receive an extra 1% boost. Although the proposed CMS plan initially would exclude solo and small physician practices, the modifier would be applied universally to all physicians treating Medicare patients starting in 2017.

The value-based modifier was mandated by Congress under the Affordable Care Act, but the details were left up to the administration. CMS outlined the initiative in its proposed 2013 Medicare physician fee schedule released on July 6. The American Medical Association and other physician organizations said they appreciated the Medicare agency’s proposed decision to limit the number of physicians exposed to modifier reductions in the early years, but several organized medicine groups submitted comments to CMS with the hopes of improving the rule.

The AMA warned that many physicians could be caught unaware of the program’s requirements when the reporting period officially begins Jan. 1, 2013. For instance, doctors in a practice could avoid the penalty by participating as a group in the Medicare physician quality reporting system, a related component to the modifier initiative. But the group first would need to register for that PQRS reporting option by Jan. 31, 2013 — just three months after the rules for the modifier are finalized.

“More time is also needed to refine the methodology and ensure that the modifiers are fair and reliable,” wrote AMA Executive Vice President and CEO James L. Madara, MD, in his Sept. 4 comment letter on the fee schedule. Value-based modifiers “are not ready for prime time, and we continue to believe that CMS could and should use the time between now and 2015 to do further testing and refinement of the modifier’s components.”

The AMA recommended that CMS narrow the modifier’s scope in the inaugural year of its implementation. It should be applied only to multispecialty groups with 100 or more physicians, the Association said.

The American Academy of Family Physicians also concluded that changes are needed to the modifier’s eligibility criteria. The pay adjustments would be applied only to physicians, but the agency proposes to assess doctors at groups with 25 or more health professionals, including nurse practitioners and physician assistants — not just practices with 25 or more physicians.

“The AAFP finds this proposal to be uneven and inconsistent,” wrote Roland Goertz, MD, AAFP board chair, in an Aug. 22 comment letter. “CMS instead ought to exclude nonphysicians when determining group size and apply the modifier to all eligible professionals within a medical group practice, since the AAFP believes that high-quality and coordinated care is a team effort.”

How the modifier would work

CMS has proposed separating physician groups into categories based on their success in PQRS, said Robert Gluckman, MD, chair of the medical practice and quality committee at the American College of Physicians. Those satisfactorily reporting quality measures will have their payment modifier initially set to zero, which prevents the modifier from lowering Medicare rates. These physicians either can accept that nonadjustment or pursue a higher pay rate based on their performances under the effort’s quality and efficiency assessments. Practices vying for bonuses, however, accept the risk that their scores could end up qualifying them for a rate decrease of up to 1%.

Eligible physicians who do not meet PQRS requirements automatically would see the modifier set at minus 1%, the bottom limit proposed by the Medicare agency. “Without a maximum penalty established, we believe that no practices would risk the chance that their payments could be cut by significant percentages as part of a voluntary program,” wrote American College of Cardiology President William Zoghbi, MD, in a Sept. 4 letter.

Practices, however, also face potential additional penalties from other programs that could decrease their rates further, physician organizations have said. Doctors in practices of all sizes face potential rate decreases of up to a total of 2.5% in 2015, for example, for failing to comply with the electronic health records initiative and PQRS.

Organized medicine groups have called on CMS to provide doctors with more education about the program. For instance, they said, the agency could notify groups of physicians that are large enough that they must report PQRS measures to ensure that the modifier penalty doesn’t apply to them.

The AAFP also expressed concern that a lack of information, such as estimates on payment adjustment amounts, could dissuade doctors successfully participating in PQRS from accepting the option to vie for higher rates under the modifier. “It will be challenging for groups to make reasonable business decisions on whether or not to subject themselves to a new and untested quality tiering system without prior knowledge of potential reward.”

The initiative also risks causing a great deal of confusion among the doctors it affects, wrote Glenn Hackbarth, chair of the Medicare Payment Advisory Commission, in an Aug. 31 letter. Physicians receiving a positive or negative adjustment probably will not understand why their rates are changing, and doctors have lacked information on what they would need to do to improve their quality scores.

“For a pay-for-performance system to be effective, it must have clarity and credibility with front-line practitioners, and it must incorporate economic incentives of sufficient size and immediacy so that the motivation to improve quality and reduce costs is strong enough to change behavior,” Hackbarth said.

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How Medicare will set value-based bonuses and penalties

CMS has proposed a differential payment modifier to adjust Medicare physician pay in 2015. The agency would generate a report comparing an eligible doctor’s quality of care and Medicare’s costs for that care in the 2013 performance period to that of his or her peers. Large practices that successfully participate in the Medicare physician quality reporting system either can accept a 0% pay adjustment or vie for higher adjustments by accepting risk under a tiered modifier structure. Physicians assigned to a high-quality, low-cost category could receive bonuses of up to 2% in 2015, while the pay of doctors giving the costliest care at the lowest quality would be cut by up to 1%. Large practices that fail to meet PQRS requirements automatically would receive the full 1% cut.

Assessment Low cost Average cost High cost
High quality 2.0%* 1.0%* 0.0%
Average quality 1.0%* 0.0% -0.5%
Low quality 0.0% -0.5% -1.0%

* Physicians who score in these categories who treat high-risk beneficiaries could receive an additional one percentage point in bonus money.

Source: Proposed 2013 physician fee schedule, Centers for Medicare & Medicaid Services, Federal Register, July 30 (link)

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