The Road to Value-Based Payments is Now Open

Oct 15, 2015

The decisions your practice makes and the steps it takes toward value-based care today will have a big impact tomorrow. Here's what you need to know.

The shift from volume- to value-based reimbursement is well underway and physicians are likely finding it challenging to keep up with the changes and various emerging payment models.

According to Allison Brennan, senior advocacy advisor, and Sara Brown, government affairs representative, for the Medical Group Management Association (MGMA) government affairs office, practices will continue to be affected since there is a significant increase in enrollees in Medicare. Every eight seconds, according to U.S. Census data, someone ages into the Medicare program since approximately 10,000 baby boomers turn 65 every day. This is driving up costs, since naturally more enrollees means more expense.

As a result, last January, for the first time in the history of the Medicare program, HHS set explicit goals for alternative payment models and value-based payments. Among other targets, HHS Secretary Sylvia Burwell announced the goal of tying 50 percent of payments to alternative payment models, such as accountable care organizations or bundled payment arrangements, by the end of 2018.

One of the payment models with the potential to affect physicians immediately is the Value-Based Payment Modifier (VBPM). The VBPM provides for differential payment to a physician or physician group under the Medicare Physician Fee Schedule (PFS) based on the quality of care compared to cost of care over a performance period. The program will be phased in over the course of three years based on physician group size, beginning with groups of 100 or more EPs or physicians this year and affecting all physicians by 2017. And that data for all physicians under scrutiny in 2017 comes from this year.

Under the VBPM, physicians' score is split 50 percent / 50 percent through:

•Outcomes measures: Three composite measures on acute and chronic prevention quality indicators; all-cause readmission

• Cost measures: Total per capita cost (includes Medicare Part A and Part B spending), and per capita cost for four chronic conditions (COPD, coronary artery disease, diabetes, heart failure)

Another emerging payment model for physicians are accountable care organizations (ACOs), which are not new, but continue to evolve. There are 338 current ACOs in the Medicare Shared Savings Program participating in two payment models: a one-sided model where providers share in savings only, and a two-sided model with shared savings and losses.

Accountable care organizations have also been identified as an alternative payment model for practices to implement to avoid scrutiny through the Merit-Based Incentive Payment System (MIPS) coming in 2019.

According to Brennan, “with smaller margins and greater risk, practices will have to closely evaluate the services they provide.” In addition, Brennan pointed out that practices with a sophisticated understanding of financial and clinical analytics will be best positioned for these evolving payment models. 

She also urged practices to stay ahead of the curve and thoughtfully consider if certain voluntary programs are right for their practice.  Those practices that can be ready to adapt to mandated payment changes will be more likely to succeed, she added.

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