The dog days of summer have certainly arrived. In addition to early morning runs in a sauna and always forgetting to apply sunscreen to the tops of my feet, this time of year brings additional sport. That’s right, the proposed rule for the 2015 Medicare Physician Fee Schedule is now hot off the press and ready for consumption! There are several nuggets in the proposed rule this year, but I thought we should first turn our attention to a recent “hot” topic in this blog, the physician value-based payment modifier, now thankfully shortened to the “VM”.
VM highlights
The VM occupies roughly 80 pages of the double-spaced, 600-plus page version of the proposed rule, but the bulk of that is an attempt to explain the intersection of the VM and several of the shared savings programs in play today. Suffice it to say, what they are proposing at this intersection has enough complexity that this writer will await the final rule to make sense of that morass. No, our plan today is to explore what VM-related components of the proposed rule will impact the breadth of nephrology. In my view, the highlights in the proposed rule related to VM include:
- Everybody is in for 2017 – Recall this program has a performance period that precedes the payment period by a couple of years. So what you do in 2015 impacts the application of the VM to your Part B Allowable in 2017. The proposed rule brings all practices into the fold in 2017.
- Everybody means everybody – As it stands today, the VM is only applied to the docs in your practice. The proposed rule would also bring NPs, PAs, and other eligible professionals that bill for services using your Tax ID number into the bonus and penalty sections of the program.
- The maximum penalty doubles – The progression here has been interesting to watch. As you may recall, when this thing started large groups were the first in and the maximum penalty anyone would face in 2015 was 1.0%. This doubled in 2016 to 2.0%, and in a troubling trend it will double again in 2017 to 4.0%. We are beginning to enter the realm of serious deniro with a 4 percent penalty! Beware the unbearable quickness of doubling.
- Penalty limited to larger groups – Continuing with their history of gradually welcoming you to this party, solo practitioners and docs in groups with 2-9 providers would be “held harmless” in 2017. That is to say, they would have the opportunity to collect the bonus (a rare opportunity as we will see later) but they would not face a VM penalty in 2017.
- A minor change in the patient attribution process – In a minor departure from the Shared Savings/ACO patient attribution process, the proposed rule is now first looking for the plurality of outpatient primary care services delivered by family practice, internal medicine, general practice, and geriatrics physicians in addition to outpatient primary care services rendered by NPs, PAs, and CNSs. If the beneficiary is not attributed in this first pass, the second look examines the plurality of the same services delivered by non-primary care physicians.
- Everyone faces a stiff penalty for not reporting quality measures – Perhaps the most important feature of this program is the penalty for not successfully participating in PQRS next year. Regardless of practice size, if you fail to successfully report PQRS in one flavor or another in 2015, in the parlance of VM you will find yourself in Category 2. The proposed rule will apply a 4.0% VM to all providers in Category 2. And let’s not forget the 4 percent penalty will be in addition to the 2 percent penalty for not participating in PQRS in 2015.
The Emperor’s New Clothes
The architects of the VM program appear to be banking on the notion that practices will be motivated to deliver high quality at low cost, either because they are chasing the positive VM incentive, fleeing the potential VM penalty, or perhaps a little of both. I’d like to gently push back on that notion by sharing some insights derived from additional content buried in the recesses of this proposed rule. The matrix below from the proposed rule defines the various applications of the 2017 VM:
Granted +4.0x is an incentive worthy of chasing and a -4.0% penalty is something I would run from, but how often will these corners of the matrix actually occur? Well, if you keep reading deep enough into the bowels of the proposed rule, you will come across table 65, which I have reproduced below. This past September, CMS shared what is called a Quality Resources Use Report (QRUR) with the 6,700 plus practices containing 25 or more providers (representing almost 400,000 physicians). These reports contained practice data for the VM based on VM-related practice data for patients that would have been attributed had the VM been in play in 2012. If you examine cost and quality performance for the 1,032 groups with 100 or more providers, those practices would fall into the VM matrix as depicted in table 65 below.
What’s immediately obvious is very few practices will get hammered by the maximum VM penalty (3.6%) and even fewer will win big (0.7%). Granted this is a distribution of the largest practices in the country, but at the end of the day, the structure of this program is such that the majority of practices (almost 82% in table 65 above) will see no impact from the VM. Of note, every practice in the country will receive a QRUR later this summer. My suggestion is that you take a close look at it when it arrives as it will provide useful insights regarding where your practice may land in the future.
The tide will go out
Warren Buffett, perhaps the greatest value-based investor of all times, once said , “After all, you only find out who’s swimming naked when the tide goes out.” I have a lot of respect for the Oracle of Omaha, and I think this quote is apropos to our current discussion. You will hear a lot about the VM and strategies for optimizing your practice’s approach to this program in the months ahead. Wherever you turn these days you will find calls for a movement towards a system the pays for value in lieu of volume. The physician value-based modifier is intended to facilitate such a transition. But lurking beneath the surface, this emperor may not be wearing clothes. As noted above, very few practices will actually be financially impacted one way or the other, and I might argue those that will be impacted have little recourse.
The real news here is the remarkable importance of successful participation in PQRS next year; fail to do so and your Part B Allowable will take a 6.0% hit in 2017, successfully participate and you will avoid the 2% PQRS penalty in 2017, and you will likely find yourself among the distribution defined in table 65 above.
What do you think about VM and this emperor’s new clothes? Drop us a note and join the conversation.
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