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Value-based purchasing programs: Identifying 2016 program changes and insights for MIPS transition

While much attention is being paid to the rollout of Medicare’s Merit-Based Incentive Payment Program (MIPS), one still must focus on the current physician value-based purchasing programs scheduled to sunset at the end of this year:  

Meaningful Use:
Physicians will need to attest to meaningful use of an electronic health record in 2016 by February 28, 2017, to avoid a 3 percent reduction on all Medicare Physician Fee Schedule (MPFS) payments in 2018. There is no group practice reporting option for meaningful use; each physician is responsible for submitting his or her own attestation.

PQRS Reporting:
Physicians (either individually or as a group practice) will need to report on PQRS quality measures for 2016 performance during the first quarter of 2017 (the actual deadline varies with the manner of reporting) to avoid a 2 percent reduction in MPFS payments in 2018 (in addition to any Meaningful Use penalty).

Value Modifier:
To calculate a group practice’s 2018 Value Modifier (and the associated penalty or bonus payment), CMS will use the practice’s scores on specified quality and efficiency measures derived from claims and PQRS-reported data. If a practice (or a majority of its physicians) do not report on PQRS measures for 2016, that group will be subject to the maximum 4 percent penalty in 2018 (in addition to the 2 percent penalty discussed above).

This article summarizes key changes in each program for this year and how that program compares with upcoming MIPS requirements. In addition to avoiding penalties that add up to 9 percent of MPFS payments (and possibly receiving a Value Modifier bonus), the lessons learned through gathering and reporting data and from the information provided by CMS will help physicians identify opportunities for improvement as they transition to MIPS in 2017.

Meaningful Use  

In the 2015 – 2017 EHR Incentive Programs Final Rule published last October, CMS announced the EHR reporting period for 2016 would be the full calendar year for all physicians who previously have attested to meaningful use. Upon realizing the significant work involved to implement EHR technology certified to the 2014 edition and to address changes to the objectives and measures in Modified Stage 2, however, CMS now proposes to permit all physicians to use any continuous 90-day reporting period for 2016.    

For 2016 reporting, all physicians will attest to a single set of ten objectives, each of which has one to three measures associated with it. . This replaces the core and menu objectives structure previously employed. CMS has published a tip sheet summarizing the objectives and measures for quick reference.   

With MIPS, the Meaningful Use Program will be replaced by the Advancing Care Information (ACI) component, accounting for 25 percent of the MIPS composite performance score. ACI will streamline measures, emphasizing interoperability, information exchange and security measures. Requirements for clinical decision support, computerized provider order entry and separate quality measure reporting will be eliminated. Also, required public health reporting will be limited to an immunization registry; submission of syndromic surveillance reports no longer will be required.

Bottom line:  in addition to avoiding the 3 percent penalty for 2018, physicians who commit to successfully attesting to meaningful use for 2016 will be well positioned to earn top scores on the MIPS ACI component in 2017.   

PQRS Reporting  

In late September, CMS made available PQRS feedback reports for each Medicare Part B-enrolled Taxpayer Identification Number (TIN) under which at least one individual physician (identified by his or her National Provider Identifier, or NPI) or group practice reported at least one valid PQRS measure during the 2015 reporting period. (Instructions on how to access and interpret these feedback reports are available on CMS’ PQRS Analysis and Payment page.) Each feedback report states whether physicians billing under the TIN will be subject to the 2 percent penalty in 2017 for failure to meet PQRS reporting requirements for 2015.  

According to CMS, the “majority of eligible clinicians” avoided the 2017 penalty by successfully reporting for 2015. Earlier this year, CMS released a report detailing PQRS incentive payments through 2014, but the agency has not provided such detail regarding PQRS penalties imposed since 2015.    

The 2016 PQRS reporting requirements are substantially the same as the 2015 requirements, with some minor changes to the lengthy list of measures from which a physician or practice may select. Most physicians or practices still must report on a minimum of nine measures from at least three of six quality domains, including at least one cross-cutting measure. CMS’ 2016 PQRS Implementation Guide provides both measure specifications (numerators and denominators) and reporting mechanisms.

With MIPS, PQRS will be replaced by the reporting requirements associated with the quality component of the composite performance score. Physicians and practices will be required to report on six quality measures without regard to domain. One of the six measures must be a cross-cutting measure and one must be an outcome measure.

Prior to each performance year, CMS will publish a list of measures from which a physician or practice may choose to report. The 2017 list will be a refined version of the 2016 PQRS measures list. For each measure for which data is available, CMS will publish deciles based on national performance in a baseline period (two years prior to the performance year). These deciles will show, for example, the score a physician had to achieve on a certain measure to be in the top 50 percent of all physicians reporting on that measure.

The array of PQRS reporting methods, including registry, EHR and web interface, will be largely preserved for purpose of reporting quality performance under MIPS. There will be some changes to the “data completeness” standards for certain reporting methods which may impact a physician’s or practice’s selection of a reporting method.   

Value Modifier – Quality and Resource Utilization Report (QRUR)

The Value Modifier adjusts a physician’s MPFS payments upward or downward based upon the quality of care furnished compared to the cost of care during a performance period. The program is budget neutral, meaning the total amount paid out as bonuses must be equal to the total amount withheld as penalties.

CMS calculates the Value Modifier at the TIN level, i.e., group practice or solo practitioner. Thus, all physicians billing under a certain TIN will be subject to the same payment adjustment. CMS calculates a TIN’s Value Modifier based on a combination of the practice’s scores on quality measures and resource use measures.  

A practice’s quality component score is based on its PQRS reporting as well as claims data. Because CMS cannot calculate a practice’s Value Modifier if the practice did not fully report on PQRS measures (either through group reporting or having at least one-half of its physicians report individually), the physicians in such a practice will be subject to an automatic 4 percent penalty (2 percent for practices with nine or fewer eligible professionals) in addition to the 2 percent PQRS penalty.

For each practice for which CMS calculates a Value Modifier (i.e., those practices that satisfied PQRS reporting requirements during the performance year), the agency produces a Quality and Resource Utilization Report detailing how that calculation was made. CMS posted QRURs for the 2015 performance year in September 2016. The agency does not mail or electronically transmit the QRURs directly to practices. Instead, an authorized individual must retrieve the report through the CMS portal.  

In addition to the practice’s scores on its reported PQRS measures, the QRUR also includes its scores on three CMS-calculated claims-based quality outcome measures as compared to 2014 benchmarks: 

  1. Acute conditions composite
  2. Chronic conditions composite
  3. 30-day all-cause hospital readmission

The QRUR assigns each measure to one of six quality domains:  

  1. Effective clinical care
  2. Person and caregiver-centered experience and outcomes
  3. Community/population health
  4. Patient safety
  5. Communication and care coordination 
  6. Efficiency and cost reduction

CMS then calculates the practice’s score for each domain by comparing its performance to 2014 benchmarks. For reference, CMS has published the 2014 benchmarks for all PQRS and CMS-calculated measures, including the mean and standard deviation for each (with the exception of those measures for which sufficient data is not available).

The bottom line number on which the Value Modifier is calculated – the quality composite score– represents the average of these domain scores. This composite score is expressed as high, average or low quality, based on standard deviations from the mean for all practices.    

The other half of the Value Modifier equation – the cost composite score – is based on the practice’s scores on six resource use measures:   

  1. The Medicare spending per beneficiary (MSPB) measure
  2. The per capita costs for all attributed beneficiaries measure
  3. Four per capita costs measures for beneficiaries with specific conditions (diabetes, heart failure, coronary artery disease and COPD)

For each practice, the MSPB measure is calculated for those Medicare beneficiaries hospitalized during 2015 (with specified exceptions) for which the practice provided more Part B covered services during the course of hospitalization than any other practice. The per capita cost measures are calculated for those Medicare beneficiaries attributed to the group using a two-step process based on the provision of a plurality of primary care services.

In calculating a practice’s score on these resource use measures, CMS attempts to ensure “apples-to-apples” comparisons by standardizing payments and by making risk and specialty adjustments, and eliminating from the equation any measure for which there is an insufficient number of eligible cases or episodes. CMS then calculates the practice’s cost composite score by comparing its performance to 2014 benchmarks. That score is expressed as high, average or low cost based on standard deviations from the mean for all practices.

Based on their relative performance in 2015 (referred to as “quality tiering”), practices with 10 or more eligible professionals will be subject to a negative, neutral or positive adjustment on 2017 MPFS payments. Smaller practices will not be subject to negative adjustment, but will receive only one-half of the positive adjustment a larger practice with the same score would receive.  


Low quality

Average quality

High quality 

Low cost




Average cost




High cost





Because the Value Modifier is budget neutral (i.e., the amount of negative adjustments must equal the number of positive adjustments), and because many practices are automatically penalized for not reporting PQRS, the positive adjustments will in fact be greater than 2 and 4 percent. Last year, for example, a 2 percent positive adjustment became a 32 percent positive adjustment. Additionally, those practices eligible for a positive adjustment receive an additional 1 percent if they treat a high percentage of high-risk beneficiaries.        

Under MIPS, the Value Modifier will be replaced by the MIPS quality and resource use components. Unlike the Value Modifier, which is calculated at the TIN level, the MIPS composite score will be calculated at the individual NPI level. A physician will have the option of reporting on quality measures as an individual or as part of a group; if he or she elects to do both, CMS will use the higher score in calculating the physician’s composite performance score.

Like the Value Modifier, the MIPS quality component will be calculated using both provider-reported and CMS-calculated quality measures. For at least the first MIPS performance year, CMS will continue to use the same claims-based measures as are now used for the Value Modifier (except CMS will not include the hospital readmission measure for physicians practicing in smaller practices). Thus, a group practice should review its current QRUR to evaluate its opportunities for improvement on these measures.     

With regard to performance on individual quality measures, MIPS will calculate scores based on deciles rather than the mean and standard deviations. As a result, the quality composite score will be expressed as a number between 0 and 80 or 90 (depending on the size of the group) rather than simply categorizing performance as high, average or low.

For the MIPS resource use component (which comprises 10 percent of the MIPS composite score in performance year 2017, 15 percent in 2018 and 25 percent in 2019 and thereafter), CMS will continue to use the MSPB measure and the per capita cost for all attributed beneficiaries measures. However, use of the four per capita cost for attributed beneficiaries with specific conditions measures will be discontinued. In their place, CMS is developing new measures relating to resource use during specific episodes of care. Again, a practice’s current QRUR provides useful information for performance improvement relating to the two measures currently in use.