Medicare Penalties for 5477 Groups Fund Bonuses for 128

March 09, 2016

Medicare reimbursement rates in 2016 will go up by either 16% or 32% for 4273 physicians in 128 group practices that performed well in the Value-Based Payment Modifier (VBM) program in 2014, the Centers for Medicare & Medicaid Services (CMS) announced March 7.

The VBM bonuses will amount to an estimated $79.5 million in higher revenue.

In a zero-sum game of Medicare reimbursement, these bonuses are being funded by 141,382 physicians in 5477 group practices hit this year with VBM penalties also totalling $79.5 million.

The bonuses and penalties, called upward and downward adjustments, will begin showing up in Medicare fee-for-service payments within the next 6 weeks, according to CMS.

A lobbyist for group practices said the lopsided ratio of losers vs winners, in addition to the reasons so many groups were penalized in the first place, illustrates the inherent defects of the VBM program.

"We knew [the VBM] was flawed, but we could not have predicted how totally flawed it would be in reality," said Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, in an interview with Medscape Medical News. Gilberg called the government's announcement about bonuses and penalties "confirmation" of his association's deep misgivings about the incentive program.

"The average physician will look at this and think the game is rigged against them," he said.

Another controversial outgrowth of the Affordable Care Act, the VBM program adjusts a physician's Medicare reimbursement up or down based on how he or she scores on quality and cost-effectiveness measures. CMS has gradually phased in the program, applying the VBM to group practices of 100 or more eligible professionals (EPs) in 2015 and to groups of 10 or more EPs in 2016. Although groups of all sizes were eligible for bonuses this year, only groups of 100 or more EPs faced the risk of a penalty.

Next year, all physicians, including soloists, will come under the VBM, followed by other clinicians such as nurse practitioners and physician assistants in 2018.

In 2019, the VMB will be folded into the new Merit-Based Incentive Payment System (MIPS) created by the Medicare Access and CHIP Reauthorization Act of 2015. That law killed off Medicare's sustainable growth rate formula for physician reimbursement, which was detested by organized medicine, in a pivot from fee-for-service to pay-for-performance. MIPS also will absorb two other incentive programs in 2019: the electronic health record meaningful use program and the Physician Quality Reporting System (PQRS).

"Akin to Winning the Lottery"

This year, 13,813 physician groups with 10 or more EPs were subject to the VBM based on their performance in 2014. A total of 460,201 physicians work in these groups.

One hundred and twenty eight groups will receive rate hikes of either 16% or 32%. They qualified for the base bonus of 16% if they scored high on quality and average on cost in 2014, or average on quality and low on cost. Groups with those scores that treated high-risk Medicare beneficiaries in 2014 received 32%.

In contrast, 59 group practices of 100 or more EPs will see their Medicare reimbursement cut by either 1% or 2% for scoring low on quality and either average or high on cost. These practices encompass 10,298 physicians.

Another 5418 medical groups and their 131,084 physicians will incur a 2% pay cut for failing to meet the minimum reporting requirements of VBM. For the remaining 8208 groups, which have 314,546 physicians, Medicare rates will go neither up nor down. They met the program's minimum reporting requirement, but because of their performance on quality and cost measures or because there were not enough data to calculate their value modifier, their pay remains the same.

What galls the Medical Group Management Association's Anders Gilberg the most about all these numbers is how the intertwining of the VBM and PQRS programs resulted in the 2% rate reduction for 5418 groups. In so many words, they flunked VBM by flunking the PQRS program, and doubled up on penalties as a result.

CMS explained that these 5418 groups failed to meet minimum VBM reporting requirements because either they did not meet the criteria as a group to avoid the PQRS penalty of 2% in 2016, again, based on performance in 2014, or else 50% of their members did not do so on an individual basis.

To Gilberg, the PQRS program is a shaky foundation for the VBM program. For starters, PQRS rewards physicians not for performing well on quality measures, but simply for reporting their performance, good or bad. "It's not a proxy for quality, but for your ability to code and document correctly," Gilberg told Medscape Medical News.

To make matters worse, PQRS criteria are arbitrary and onerous, he said. And physicians have struggled since the program's inception to successfully submit their performance data to CMS. Gilberg said he suspects some group practices blew off PQRS participation in 2014, reasoning that it was not worth the time and effort. Furthermore, many physicians at that time probably did not understand that how a PQRS penalty would set them up for a VBM penalty, said Gilberg, adding the CMS did a poor job of educating physicians about the two programs.

Factor out the 5418 medical groups that were penalized under VBM simply because they were penalized under PQRS, and the ratio of remaining losers to winners in VBM — 59 vs 128 — seems more logical, he said. As it is, a total of 5477 groups created a jackpot for 128. "This is akin to winning the lottery."

Gilberg said he hopes that CMS does not preserve the problems with the VBM, PQRS, and electronic health record meaningful use programs in the MIPS reimbursement framework that replaces them.

"They need to hit the reset button and create an equitable program that's administratively easier [for physicians] to report, because that's been the hardest thing," he said. "It's not about quality as much as the complexity of the reporting."

Medscape Medical News asked CMS to comment on whether it considers the VBM program successful, given that 98% of the rate adjustments in 2016 were negative. The reply from CMS spokesperson Jibril Boykin was "yes."

Boykin reiterated the VBM goals of measuring and improving physician performance and rewarding physicians for high-quality, low-cost care.

"The high number of groups receiving downward adjustments comes from their failure to satisfactorily report quality measures as a group or to have at least 50% of their eligible professionals in the group satisfactorily report as individuals," he said. "We encourage providers to make sure they are reporting quality measures completely, accurately, and timely during the quality reporting cycle."

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