How Will New Physician Value-Based Payment Modifier Affect Medicare Reimbursements?
We talk a lot about value in healthcare—about how to enhance quality and reduce cost—because we all know both need an incredible amount of work. One tactic Medicare is using to improve the value equation on a large scale is aggregating and displaying physician-specific “value” metrics. These metrics, which will be used to deduct or enhance reimbursement for physicians, are known as the Physician Value-Based Payment Modifier (PVBM).
This program has been enacted fairly rapidly since the passage of the Affordable Care Act; it is being rolled out first to large physician practices, then to all groups by 2017. Those with superior performance in both quality and cost will experience as much as a 2% higher reimbursement, while groups with average performance will remain financially neutral and those who show lower performance or choose not to report will be penalized up to 1% of Medicare reimbursement. This first round, for larger groups of 100-plus physicians, will affect about 30% of all U.S. physicians. The second round, for groups of 10 or more physicians, will affect about another third of physicians. The last round, for groups with fewer than 10 physicians, will be applicable to the remaining physicians practicing in the U.S.
On the face of it, the program does seem to be a potentially effective tactic for improving value on a large scale, holding individual physicians accountable for their own individual patient-care performance. A few fatal flaws in the program as it currently stands make it extraordinarily unlikely to be universally adopted by all physicians, however. Here are a few of those flaws:1,2
1 Uncertain yield: Because it is essentially a “zero-sum game” for Medicare, the incentive or penalty for a physician (or the physician’s group) depends on the performance of all the other physicians’ or groups’ performance. As a result, there is incredible uncertainty as to how strong a physician’s performance actually needs to be, year to year, to result in a bonus payment. Given that many of the metrics will require some type of investment to perform well, such as information technology infrastructure or a quality coordinator, there is an equal amount of uncertainty about how much investment will be needed to get a certain budgetary yield. For smaller physician practices, taking a 1% to 2% reduction in Medicare reimbursements may be easier to weather financially than investing in the infrastructure needed to reliably hit the quality metrics for every relevant patient.
2 Uncertain benchmarks: Unlike many hospital quality metrics, which have been publicly displayed for years, physician-level value metrics are just now being reported publicly. This leaves uncertainty about how strong a physician’s performance needs to be in order to be better than average. In the hospital value-based purchasing program, “average” performance is extremely good, in the 98% to 99% compliance range for most metrics. It is less clear what compliance range will be “average” in the physician-based program.
3 Physician variability: More than a half million physicians in the U.S. bill Medicare, and their practice types range from primary care solo practice to multi-group specialty practice. Motivating all brands to understand, measure, report, and improve quality metrics is a yeoman’s task, unlikely to be successful in the short term. Most physicians have not received any formal education or training in quality improvement, so they may not even have the skill set required to improve their metrics into a highly reliable range, worthy of bonus designation.
4 Metric identity and attribution: Because the repertoire of physician types is broad, the ability of each physician type to have a set of metrics that they understand and can identify with is extremely unlikely. In addition, attribution of patients and their associated metrics to any single physician is complicated, especially for patients who are cared for by many different physicians across a number of settings. For hospitalists, the attribution issue is a fatal flaw, as many groups routinely “hand off” patients among other hospitalists in their group, at least once if not several times during a typical hospital stay. The same is true of many other hospital-based specialty physicians.
