Medicare incentives turn into penalties

by Marilyn Rissmiller, CMS Senior Director, Health Care Financing

Editor’s note: This is the first in a series of articles Colorado Medicine will publish about Medicare’s approach to cost containment and quality improvement.

Ready or not, the pieces of payment and delivery reform are rapidly moving into place in Colorado and elsewhere. And if you’re not among the physicians who are prepared for this significant change in health care, you’re already behind the curve.

Since the approval of the Affordable Care Act in 2010, providers have heard the repeated clarion call to line up their operations for incentives (or carrots) that will await them if they comply, and penalties (or sticks) that will strike them if they don’t.

Implemented by the Centers for Medicare and Medicaid Services (CMS), aligned programs like the Value-Based Payment Modifier (VBPM), Meaningful Use (MU) and the Physician-Quality Reporting System (PQRS) will soon shift in their effect – fundamentally altering how services are delivered and how physicians are compensated for these services. These programs aim to enhance value in health care by improving the quality of data reported by providers, refining how these services are purchased and delivered, and encouraging investment in technology. (See related sidebar: “A payment and delivery reform primer,” below).

Some physicians might take false comfort knowing that the incentives and penalties from these programs don’t technically go into effect until January 2015. Unfortunately, even those who hop on the bandwagon now won’t savor the “carrots” until 2017, but the penalties will go into effect as early as next year. (Click here to see related breakout box: “Payment and delivery reform timeline”).

Though non-participants might not avoid the initial penalties, they could avert additional losses by taking a leadership role and paying closer attention to their billing, coding and exam room practices.

“These programs will inform the entire reporting environment of health care for years to come,” said John Bender, MD, president of the Colorado Medical Society. “Even if you choose to completely ignore all components of these programs, the ramifications of these reforms will be felt in all practices, since private payers take many of their standards and payment cues from the federally sponsored programs like Medicare and Medicaid.”

Why change is afoot
These reforms were designed to reduce waste, inefficiencies and runaway costs in the health care system – while providing incentives for getting on board and penalties for non-compliance. The programs operate under the Triple Aim goals of improving the patient experience of care, improving the health of populations and cutting costs.

Because of the emphasis on finding new efficiencies, improving quality and reducing costs in health care, there might be a perception that the aforementioned programs effectively chastise physicians to nudge them into operating in a more cost-efficient manner.

Furthermore, because information from PQRS feeds the Physician Compare website and potentially other “data dumps,” non-participating physicians could end up effectively “blacklisted” because they’re not included. The site could even hurt the reputations of participating physicians when the data aggregates information that is skewed because of circumstances beyond their control.

But despite the potential downfalls, Bender maintains the programs intend to benefit all physicians – and the health care system – in both the short-term and long run by providing a rich stream of data that will improve both the quality and efficiency of health care practices. 

“When viewed from a pragmatic lens, these programs could be seen as an opportunity to use data in a way that will make practices better,” Bender said. “Not only do [the programs] gather data and provide incentives and penalties for physicians, many of them are encouraging new types of innovation to explore efficiencies and ways to aggregate meaningful data.”

The big picture
Reform proponents say these programs are a work in progress, but what is the overarching goal? In short, it’s the belief that better data and consistent standards will lead to better health care.

Currently, a movement is afoot to establish a common set of standards that will create more consistency in the data collected among providers to enable them to produce and generate more relevant, apples-to-apples data from which to measure effectiveness and efficiencies.

These programs operate from the premise that streamlining data will give providers more reliable and actionable information.

While consistency is key in turning the tide, a regional approach will enable providers to make the best use of the data. And there’s no one right way to realize these efficiencies and improve health care.

Though we are still in the early stages of knowing how to use data appropriately, much of the available data is vastly superior to previous statistics. Over time, all of these programs will mature and lead to different payment incentives or disincentives, and/or payment adjustments intended to hit the Triple Aim health care targets.

To foster innovation in payment and delivery reform, CMS sponsors the Comprehensive Primary Care Initiative (CPCI), a collaboration between all major payers – including Medicaid and the largest insurance companies.

The initiative, which has recruited four participating states including Colorado, is dedicated to developing new and more effective and efficient models of health care – and may be a bellwether for other states as the cost-containment measures take root.

In Colorado, there are numerous examples of how CPCI works on a community level. One familiar example: Over the years, Mesa County has built a collaborative relationship between the area’s dominant physicians group, hospitals and health insurance carriers that has become a model for payment and delivery reform.

The system works in Grand Junction and Mesa County because the region has a healthy sense of community, and a commitment to working together and helping one another – whereas the sense of community might get blurred in a larger metropolitan area. 

But the Western Slope provides an example every community and municipality can learn from.  It’s important to note that the model didn’t exactly come together overnight, but rather evolved over many years thanks to dedicated physician attention and leadership. And while the Western Slope deserves credit for its foresight and innovation, Colorado physicians simply can’t afford to take a backseat in implementing these changes.

A call for action
Although it may be tempting for physicians to take a “wait-and-see” approach before getting on board with these reform models, those who decline to take part might end up being less adept at using information that can improve their practices, uncover new efficiencies, enhance safety and allow them to take advantage of the incentives that are coming to light every day.

As the saying goes, “If you keep doing the same thing and expect a different result, that’s one definition of insanity.”

Whether or not you agree with Medicare’s approach to improving quality and containing costs, truly transforming health care into a more sustainable system that avoids “insanity” and meets the needs of patients and providers will not happen simply because we want it to. It will require forethought and planning in order to make these changes effective.

Change is endothermic – it consumes energy, and that energy must constantly be refreshed. Sitting by and waiting for the change to happen is not an appropriate strategy. If you’re going to improve, you need to take active steps to do so.

Sidebar: Medicare payment and delivery reform primer

Major components of these payment and delivery reform programs, overseen by the Center for Medicaid and Medicare Services, are scheduled to go into effect in the fee-for-service program in 2015. Though each of these explores a different part of the health system “elephant,” they share the common intent of appropriately lowering costs by improving the process of care, making it more effective and more efficient.

Physician Quality Reporting System – PQRS uses a combination of incentive payments and payment adjustments to report recording of quality information by eligible professionals. Beginning in 2015, the program will apply a payment reduction to providers who do not satisfactorily report data on quality measures for covered medical services.

To participate in the 2014 PQRS program, individual eligible health care professionals may choose to report quality information through one of the following methods: 1) Medicare Part B claims; 2) Qualified PQRS registry; 3) Direct Electronic Health Record (EHR) using Certified EHR Technology (CEHRT); 4) CEHRT via Data Submission Vendor; 5) Qualified clinical data registry (QCDR).

Physician Compare – This website,, serves as the primary and authoritative source for all publicly available Medicare information.

Physician Compare helps consumers find and choose health care professionals enrolled in Medicare so they can make informed decisions about the health care they get, as required by the ACA. Though still in its rudimentary phases, the website will evolve into a publicly accessible repository of information on physicians.

Value-Based Payment Modifier – VBPM will support a physician value-based purchasing program that will track the quality and costs of large group practices of 100 or more physicians.

The program provides comparative performance information to physicians and medical practice groups as part of Medicare’s efforts to improve the quality and efficiency of medical care. By providing meaningful and actionable information to physicians, CMS is moving toward physician reimbursement that rewards value rather than volume.

VBPM contains two primary components: the Physician Quality and Resource Use Reports (QRURs) and the development and implementation for the Value-based Payment Modifier.

Meaningful Use – The Medicare and Medicaid Electronic Health Records (EHR) programs provide incentive payments to eligible professionals, provider facilities and hospitals as they implement, upgrade or demonstrate meaningful use of EHR technology.

Meaningful use is using certified electronic health record (EHR) technology to: improve quality, safety, care coordination, and population and public health; reduce health disparities; engage patients and families; and maintain privacy and security of patient health information. Ultimately, it is hoped that the meaningful use compliance will result in better clinical outcomes; improved population health outcomes; increased transparency and efficiency; empowered individuals; and more robust research data on health systems.

Eligible professionals have until the end of 2014 to apply for the program incentives. Beginning in 2015 a payment reduction will apply to providers who have not achieved meaningful use.

Source: Centers for Medicare and Medicaid Services

Categories: Communications, Colorado Medicine, Cover Story, Practice Management, Coding and Billing