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Value-Based Reimbursement Knowledge Hub

Health care payment reform aims to fix the broken reimbursement system in the U.S. See what it takes to thrive in this new, value-based payment environment.

Penalties Are Underway, and Growing

Think you’re strictly fee-for-service? You’re wrong. Taking part in the transition to value-based care is rapidly becoming a requirement, with HHS planning to tie 90% of all Medicare payments to value by 2018.*  And with these programs already past the initial incentive phase, penalties are being rolled out for non-compliance and costing practices immensely. So if your practice is billing Medicare, and you’re not meeting quality measures, then you’re losing money.   

Meaningful Use penalties 

Meaningful Use incentive payments are no longer available for providers new to the program. Medicare-eligible professionals who do not successfully demonstrate meaningful use of an EHR will be subject to a penalty by way of a Medicare payment reduction. The reduction starts at 1% in 2015 and increases each year that an EP does not demonstrate meaningful use, to a maximum reduction of 5%.

For those new to Meaningful Use 

Providers who are new to Meaningful Use in 2016 must report on a 90-day period within the first three quarters of the year, or prior to October 1, 2016, to avoid an increase in penalties.  


PQRS penalties

Much like Meaningful Use, PQRS requires providers to report data to CMS on certain quality measures for their Medicare patients. Eligible providers can report PQRS as an individual provider or as a group practice.

Providers who do not report PQRS in 2015 will automatically receive a minimum 4% reduction on their Medicare Part B payments in 2017 – that’s 2% for failing to report PQRS and 2% for not participating in Value-based Modifier (VM). For practices of 10 or more providers, that automatic penalty is 6% (2% for failing to report PQRS and 4% for not participating in VM).


The Value-based Modifier Program (VM)

The Value-based Modifier (VM) program requires providers to meet goals related to quality and cost, and uses PQRS reported data. 2015 marks a significant expansion of this initiative, with potential penalties and incentives for practices with 10 or more providers.

How the program works: Providers reporting PQRS don’t need to report additional data. Value-based Modifier, based on a combination of CMS calculations and quality measures reported through PQRS, determines a composite score for each practice, reflecting the quality and cost of care compared against national benchmarks. Depending on whether the performance is above the benchmark, below it, or average, CMS calculates a penalty or an incentive.

CMS has been phasing in VM over time and has taken an enormous step in expanding the program. In 2016, possible program penalties will affect not just physicians, but all eligible professionals, too, via the VM adjustment.

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