The Value-Based Payment Modifier

The Affordable Care Act requires the Department of Health and Human Services to develop a budget neutral payment modifier to provide differential payment to providers based on the cost and quality of care delivered to Medicare beneficiaries. The modifier will be implemented for a select group of providers by Jan. 1, 2015, and for all providers by Jan. 1, 2017.

The value-based payment (VBP) modifier applied to 2015 payments will be based on performance in 2013. CMS proposes 62 quality measures for consideration and intends to coordinate performance measures related to the modifier with existing programs such as Physician Quality Reporting System.

CMS will be determining how to incorporate resource use/cost measures into the VBP modifier. CMS proposes to use total per capita costs and per capita costs for beneficiaries with four chronic conditions: diabetes, heart failure, coronary artery disease and COPD.

CMS is seeking comments on the use of an episode-based cost measure derived from the format of the Medicare Severity Diagnosis Related Group system (Parts A and B charges from day of service and through a specific number of days after discharge) until specific episode groupers are developed for the identified high-cost, high-prevalence conditions. They are seeking comments on the use of resource and cost measures used in private sector quality improvement initiatives and are also exploring how to create composite measures that would allow them to compare quality in relation to cost. CMS is seeking comments on two additional areas: 1) How the modifier may be used in systems-based care settings; and 2) how to address the needs of physicians in rural areas and other underserved communities, which may impact implementation of the modifier in such regions.


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