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Parsing Medicare's Value-Based Modifier


Medicare's new value-based modifiers are complex. Here are the important points your practice should know about getting paid for value.

Medicare is on a mission to shift some of its risk to providers by basing part of fee-for-service (FFS) payments to value; i.e., a combination of outcomes and costs. CMS intends to tie 85 percent of all Medicare FFS payments to value by 2016 and to increase that percentage to 90 percent by 2018. Quality reporting is still voluntary but, as of Jan. 1, 2015, non-participation in 2013 reduces 2015 Medicare reimbursements.


PQRS is the successor to PQRI and is a completely separate program from meaningful use. Some of the PQRS measures are also meaningful use clinical quality measures (CQMs). Others are similar, but different. Still other quality measures are included in either PQRS or meaningful use, but not both. It is possible to be a successful meaningful user and an unsuccessful PQRS reporter, and vice versa.

For PQRS, a group is any Medicare-enrolled Taxpayer Identification Number (TIN) associated with more than one NPI. Any provider who has assigned payments to a group TIN not registered as a Group Practice Reporting Option (GPRO) reports PQRS data as an eligible professional (EP). There is no requirement for an EP to register for PQRS.

A GPRO's PQRS data is analyzed in the aggregate. In some cases, good PQRS reporting on the part of some EPs within a TIN can overcome less good reporting by others and result in the group as a whole reporting successfully.

Value Modifier Matrix

The value modifier (VM) is also separate from PQRS, although it depends upon PQRS data. Based upon PQRS quality data and Medicare claims data, CMS will eventually assign each TIN to one of 9 cells in a 3x3 matrix. The size of the adjustments and their applicability to groups of different sizes vary depending upon the payment year. Beginning in 2017, based upon 2015 quality data, all TINs will be subject to both positive and negative VM adjustments.


Low cost

Average cost

High cost

High quality



+0.0 percent

Average quality


+0.0 percent


Low quality

+0.0 percent








* Eligible for an upward adjustment

** Subject to a downward adjustment, depending upon calendar year and group size

Cell assignment will be done annually based upon activity in the previous calendar year and apply to Medicare Part B payments for services rendered the following calendar year. For instance, a cell assignment will be determined for entities based upon PQRS data submitted no later than early 2016 for Part B services rendered in 2015. The cell assignment determines the Medicare payment adjustment for Part B services rendered in 2017.

PQRS Impact on Value Modifier

A group that has not registered to report as a GPRO will be deemed to have been unsuccessful in PQRS reporting unless at least half of the group's EPs have been individually successful in reporting PQRS data.

A TIN's failure to successfully report PQRS data for the applicable calendar year ensures assignment of the TIN, whether solo practitioner or group, to the high-cost/low-quality cell. The associated payment adjustment will be in addition to the PQRS penalty and will apply even if the group's size would not otherwise be subject to a negative adjustment in that year.

Each physician associated with a TIN will be subject to the same VM adjustment.

Risk Adjustment

EPs or groups of average or high quality care at low or average cost are eligible for a patient risk premium if (1) reporting quality measures via the Web interface or CMS-qualified registry, and (2) average beneficiary risk score is in the top 25 percent of all risk scores.

Medicare Beneficiary Assignment

Medicare beneficiaries are automatically assigned to a TIN based upon primary-care services provided to that beneficiary during the reporting period. If the beneficiary has no primary-care provider, the beneficiary is assigned to the TIN that provided the most primary-care services to the beneficiary during the period. It appears to be at least possible for no Medicare beneficiaries to be assigned to a given specialty TIN.

Cost Adjustment

Raw cost figures are adjusted for patient risk profiles. There is no cost adjustment for specialty. The costs considered are the aggregate Part A and Part B costs for the beneficiary, as well as the costs associated to specific chronic conditions.

CMS' "PQRS Made Simple" publications notwithstanding, nothing about the value-based programs is simple.  Meaningful Use, PQRS and VM are individually complex, and their interrelationships and partial overlaps make things worse.  Understanding how to comply and, maybe more importantly, the consequences of non-compliance are not for the faint-hearted.

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