Monday Musings #P4Q

VBM-smThe US healthcare “fee for service” payment system is rapidly transitioning away from one based on volume to one that is determined by “value” and which links cost to improved patient outcomes. The problem with the current system is that patients who stay in service the longest and receive the greatest number of procedures and treatments generate the greatest revenue for providers, regardless of whether patient outcomes are favorable.

Quality Reporting is Mandatory in 2016

The transition to a different payment method began gradually in 2008 with Medicare’s “Improvements for Patients and Providers Act” which authorized a 2% bonus of Medicare billing for qualified health providers (QHPs) who successfully reported quality measures. Initially known as the Physician Quality Reporting Initiative (PQRI), the reporting program is now called the Physician Quality Reporting System (PQRS). PQRS bonus payments have now ended. Clinicians who did not participate in PQRS in 2014 will experience a 2% reduction of their Medicare revenue in 2016. It’s true that at 2%, only a small percentage of physician revenue is at stake under PQRS. However, under the Affordable Care Act (ACA) (aka, Obamacare) the financial penalty for not participating in quality reporting can quickly become significant – and the penalties are growing rapidly.

The reason you have to start paying attention to PQRS now is that as part of the ACA, the Value Based Payment Modifier (VM) will result in additional payment reductions to both clinicians and hospitals tied to PQRS performance and cost of care. Most clinicians will see the effect of the VM in 2017 based on their PQRS participation in 2015. That means failure to participate in PQRS in 2015 will result in a PQRS penalty of 2% in 2017, AND a VM penalty of 2% (for groups of 9 or less) and 4% for groups of 10 or more.  There are even more penalties, however.

Tomorrow I will explain more about PQRS and how you can participate.


Caroline Fife, MD

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