1. TRANSFORMATIONAL CHANGE
The Physician Value-Based Payment Modifier
(VBM)
Georgia Partnership for Telehealth
Fifth Annual Spring Conference
March 19-22, 2014
Raymond Paul Tew
Medicus Innovation

2. Peter Drucker
What do we have
to do today to
be ready for
an uncertain
tomorrow?

3. Center for Medicaid and Medicare Services
• Largest payer of healthcare in the world
• Provides medical care to 30% of the US population
• $800,000,000,000.00 per year - $120,000,000,000.00 Part B
• $433,000,000,000.00 per year – Total Yearly GDP Georgia
CMS Transition:
From a ―passive‖ payer of services
To an ―active‖ purchaser of value (quality and cost)

4. History of Value Based Reimbursement
A Decade in the Making
2001 First Step - The CMS Quality Initiative - ensuring high quality health care through published consumer
information on the performance of health care providers,
2002 Initial Quality Initiative Focus - CMS partnered with the Agency for Healthcare Research and Quality
(AHRQ), to develop and test the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and
Systems) Survey
2003 Hospital Quality of Care Reporting - CMS began collecting data voluntarily submitted for 10 ―core
―process of care measures.
2004 The Hospital Quality Alliance - hospitals nationwide report data to the CMS on indicators of the quality
of care measures.
2005 Deficit Reduction Act (DRA) of 2005 - The Secretary of HHS to was required to ―make outcome and
efficiency measures publically available
2006 CMS implemented the HCAHPS Survey in October 2006,
2007 Incorporation of HCAHPS and Readmission Measures into IQR
2008 Initial Discussion of Value-Based Purchasing for Physicians and Other Professional Services
2009 First public reporting of HCAHPS results and HHS Directed development of VBP for all providers
2010 Introduction of the Affordable Care Act which mandates transformation of reimbursement models

5. Value vs Quality
Quality = A predetermined benchmark or score that provides
evidence of achievement – 1100 different measures used by CMS
to measure quality and that impact provider reimbursement
Value = Quality and Efficiency (COST)

6. Characteristics of Transformational Change in Healthcare
• A shift in the underlying forces of an industry segment (financial
incentives via value based reimbursement + mandated accessibility)
• It affects the entire value network
• The change is irreversible, not cyclical
• Causes a shift to different business models for the future –
Telehealth, RCO’s, PCMH, ACO’s, IDS, CEO, Clinic Model for Acute Care
Hospitals

7. CENTER FOR MEDICARE AND MEDICAID INNOVATION WITHIN CMS.
TITLE III, PART III—ENCOURAGING DEVELOPMENT OF NEW PATIENT CARE MODELS - SEC. 3021.
(2) SELECTION OF MODELS TO BE TESTED.—
(B) OPPORTUNITIES.
i. Promoting broad payment and practice reform in primary
care, including patient-centered medical home models for high-need
applicable individuals, medical homes that address women’s unique
health care needs, and:
Models that transition primary care practices away from fee-for-
service based reimbursement and toward comprehensive payment
or salary-based payment.
i. Contracting directly with groups of providers of services and
suppliers to promote innovative care delivery models:
Such as through risk-based comprehensive payment or salary-based
payment.

8. The Transition
Traditional
FFS
Pay for
Performance
Bundled
Payments
Shared
Savings
(ACO’s)
Partial Risk Full Risk
LITTLE MARGINAL SIGNIFICANT SUBSTANTIAL
Cost Accountability
LITTLE MARGINAL SIGNIFICANT SUBSTANTIAL
Savings Potential for Health Plans and Customers?
LITTLE MARGINAL SIGNIFICANT SUBSTANTIAL
Enhanced Revenue for Health Care Providers?

9. Headwinds - Transformational Changes
• Vast amount of new information to learn and assimilate into tangible strategies for
providers
• Information is fragmented, located in multiple government sources, changes often and is
often contradictory.
• New capabilities, working relationships across silos, treatment protocols, infrastructure
investments have to be made in advance
• Requires a new ―mindset‖ in healthcare from ―let’s study it, prove it and then implement
it‖ to one of experimentation, quick decision making, quick wins, quick failures and
readjustment
• New cultures will have to be created that stress and reward collaboration and
experimentation
• Leadership skills are critical for success, though historically there has been very limited
investment in developing the leadership skills of healthcare providers – IM = 7 years/2
hours – Why?
• Worlds biggest Change Management initiative

10. CMS Disclaimer
This presentation was prepared as a tool to assist providers and is not intended to grant rights or
impose obligations. Although every reasonable effort has been made to assure the accuracy of the
information within these pages, the ultimate responsibility for the correct submission of claims
and response to any remittance advice lies with the provider of services.
The Centers for Medicaid and Medicare Services (CMS)
employees, agents, and staff make no
representation, warranty, or guarantee that this compilation of
Medicare information is error-free and will bear no responsibility
or liability for the result or consequences of the use of this
guide.
This presentation is a federal summary that explains certain aspects of the Medicare Program, but
is not a legal document. The official Medicare Program provisions are contained in the relevant
laws, regulations, and rulings.

11. Transformational Change:
Physician Value-Based Payment Modifier Program
Objectives:
 Understand the alignment of incentives and penalties of the VBM Program with those
of other value based reimbursement programs for physicians and hospitals
 Summarize the components of the Value Based Modifier Program for Physicians
 Describe the timeline for physician participation in the VBM Program
 Learn the quality and cost performance benchmarks that impact Physician Medicare
Reimbursement under the VBM Program
 Understand the potential financial impact of the Value Based Modifier for Physicians
 Describe potential practice options for how physicians can respond if faced with
reimbursement penalties under the VBM program

12. Value Based Reimbursement Policies
and Provisions in the PPACA
Hospitals:
 Inpatient Quality Reporting System (IQR)
 Value-Based Purchasing (VBP)
 Hospital Readmission Reduction Program (HRRP)
 Hospital Acquired Condition Reduction Program (HACRP)
Physicians:
 Physicians Quality Reporting System (PQRS)
 Value-Based Modifier (VBM)
 Electronic Health Records (EHR)
Emerging Care Models Endorsed by PPACA:
 Accountable Care Organizations (ACO)
 Patient-Centered Medical Homes (PCMH)

13. HOSPITAL
IPPS Inpatient Prospective Payment System
DATA
CLINICAL
QUALITY COST
PHYSICIANS
Physician Fee Schedule
DATA
CLINICAL
QUALITY COST
Strategic Alignment of Value Based Reimbursement Regulations
• IQR
Inpatient
Quality
Reporting
• Efficiency
Ratio
• Value-based
Purchasing
• Readmission
Prevention
• Hospital
Acquired
Conditions
• PQRS
(Physician
Quality
Reporting
System)
• Electronic
Health
Records
• eRx
• Efficiency
Ratio
• Value-based
Modifier

14. Financial Impact of Value Based Reimbursement
Policies and Provisions in the PPACA
PROVIDERS 2013 2014 2015 2016
HOSPITALS
Inpatient Quality Reporting System (IQR) (Market basket Update Reduction) -2% -2% - 25% Annual
Increase
-25% Annual
Increase
Value-Based Purchasing (VBP) (withhold percentage on Base Operating DRG Amounts) +-1.0% +-1.25% +-1.50% +-1.75%
Hospital Readmission Reduction Program (HRRP)
(Penalty-Only Program, Reduction in Base Operating DRG amounts)
-1.0% -2.0% -3.0% -3.0%
Hospital Acquired Condition Reduction Program (HACRP)
(Penalty-Only Program, Reduction in TOTAL Medicare Reimbursements, Top 25%)
2015 Data
Period
2016 Data
Period -1.0% -1.0%
TOTALS -2.0%
+1.0%
-3.25%
+1.25%
-5.50%
+1.5%
-5.75%
+1.75%
PHYSICIANS
Physicians Quality Reporting System (PQRS) * includes +.5 for participation in a
Maintenance of Certification (MOC) Program
+1.0%* +1.0%* -1.5% -2.0%
Value-Based Modifier (VBM) (2015- 100+EPs Optional; 2016 – 10+EPS incentive only)
(Budget neutral – Incentives will offset penalties)
+-1.0% +-2.0X%
Electronic Health Records (EHR) Fixed $$ Fixed $$ Fixed $$
-1.0%/-2.0%
Fixed $$
-2.0%
Electronic Prescribing (ERx) +.5%
-1.5%
-2.0% 0% 0%
TOTALS +-1.5% -2.0%
+1.0%
-4.5%
+1.0%
-6.0%
+2.0%

15. Value Based Modifier Program for Physicians
What is it?
 Value-Based Modifier assesses both the quality of care
furnished and the cost of that care under Medicare FFS
 Began phase-in:
 CY2013 (2015 Program Year) for groups 100+ EPs
 CY2014 (2016 Program Year) for groups 10+ EPs
 CY2015 (2017 Program Year) 1+ (all physicians)
Eligible professionals:

16. VBM Metrics: Summary
 3 outcome measures
 Clinical Quality - 284 PQRS quality measures to choose from
 6 cost measures
 Patient Experience of care

17. Outcome Measures:
All Cause Readmission
all-cause risk-adjusted readmissions for attributed Medicare
beneficiaries occurring within 30 days of discharge from an
index admission, expressed as a percentage of total attributed
beneficiary admissions during a reporting period

18. COMPOSITE OF ACUTE PREVENTION QUALITY
INDICATORS (PQIs)
Bacterial Pneumonia - number of admissions for bacterial pneumonia per 100,000
population
Urinary Tract Infections - number of discharges for UTI per 100,000 population age 18
years and older in a one-year period
Dehydration - number of admissions for dehydration per 100,000 population

19. COMPOSITE OF CHRONIC PREVENTION QUALITY
INDICATORS (PQIs)
Uncontrolled Diabetes - number of discharges for uncontrolled diabetes per 100,000
population age 18 years and older in a one-year period
Short-Term Diabetes Complications - number of discharges for short-term diabetes
complications per 100,000 population age 18 years and older in a one-year period
Long-Term Diabetes Complications - number of discharges for long-term diabetes
complications per 100,000 population age 18 years and older in a one-year period
Lower Extremity Amputations for Diabetes - number of discharges for lower-
extremity amputation among patients with diabetes per 100,000 population age 18
years or older in a one-year period
Congestive Obstructive Pulmonary Disease (COPD) - number of admissions for COPD
per 100,000 population
Congestive Heart Failure (CHF) - percent of the population with admissions for CHF

20. Value Based Modifier Program for Physicians
2016 Program Metrics (2014 Reporting)
Clinical Quality - 284 PQRS quality measures aligned with one of the 6 Domains of
the NQS*
• Effective Clinical Care -182
• Patient Safety - 30
• Communication and Care Coordination/Clinical Outcome -35 (includes 3
Outcome Measures)
• Person and Caregiver- Centered Experience and Outcomes - 10
• Efficiency and Cost Reduction - 15
• Community/ Population Health -12
*Measures selected are reflective of patient population and reporting option
selected for PQRS.

21. Value Based Modifier Program for Physicians
2016 Program Metrics
Cost Measures- Each of the 6 cost measures are assigned to one of two domains:
• Cost Domain 1: Total per capita costs for all attributed beneficiaries (one measure) and the
Medicare Spending Per Beneficiary (MSPB) measure (one measure)3 days prior to, during inpatient
admission and 30 days post discharge (Part A and B)
• Cost Domain 2: Total per Capita Costs associated with the four chronic conditions: (A and B)
• COPD
• Coronary Artery Disease
• Heart Failure
• Diabetes
NOTE: Patients with more than one of the targeted conditions will be included in EACH of the
targeted conditions grouping for cost evaluation
Patient Experience of Care Measures
NOTE: Attribution - whoever provides the ―plurality of of Part A and B allowed charges

22. Physician Value-Based Reimbursement Programs
Interdependency and Impact
Physicians Who Choose Not To participate at all in 2014:
 PQRS: -2%
 EHR: -2%*
 VBM: -2% **
-6.0%
*ACA legislation give the Secretary of HHS the authority up to 5% if not
meeting target of 75% of MD’s achieving MU by 2017. Current CMS
estimates are 69% meet MU requirements by 2019.
** ACA legislation gives the Secretary of HHS wide discretion and the
authority to raise the penalty for the VBM Program if needed to
encourage participation. The is NO CAP on how high the Secretary of
HHS can raise the VBM penalty.

23. Value Based Modifier
ded on the Performance Highlights
Page?

24. Value Based Modifier

25. Value Based Modifier
cluded on the Performance Highlights
Page?

27. Quality Measures – Quality Tiering

28. VBM First Year Results: 400,000 Physicians
in Groups of 100 Eligible Professionals or larger
Based on the 2013 VBM reporting metrics:
80.7 percent of all groups scored average in quality and cost and would
not have received a payment adjustment.
8 percent of all groups would have received an upward VBM
reimbursement adjustment.
11 percent of all groups would have received a downward VBM
reimbursement adjustment.
Conclusion: Physicians Who Participated in 2013 - 1st Year VBM
Incentives and Risk - Low (+ – 1-2% Medicare Part B)

29. 29
American Academy of Family Practice:
Three Physician Group:
• Revenue: 1.5mm
• 20% Medicare case mix
• $300,000.00 Medicare Reimbursements
• 6% Penalty = $18,000.00
Options:
• Reduce Costs by $18,000.00
• Increase Revenue by $45,000.00* (45k x .40 = $18k)
*Care delivered and Costs incurred two years prior!!!
• Improve participation and quality scoring in Value Based Reimbursement
Programs
What does this mean to non-participating Family
Physicians?

30. 30
The ―Doc Fix‖:
Changing the Sustainable Growth Rate (SGR)
 Put in place to control physician rate increases, the SGR has had 17 temporary ―patches ―
put on it. The current SGR adjustment stands at -23.7%.
 With great fanfare, the House and Senate advanced a bi-partisan bill to replace the SGR.
Bill must be signed and funded by March 31, 2014 or SGR cuts go into effect.
Components of Proposal:
 In 2017, VBM, PQRS and EHR programs will ―sunset‖ as separate programs.
Components will be combined into a SINGLE program in 2018 (for 2018 – 2023)
with the Merit-Based Incentive Payment System (MIPS)
 All physicians will receive a composite score (0-100) based on their performance
against thresholds and benchmarks in 4 domains:
 Quality ((includes measures in the current PQRS, VBM, and MU programs)
 Resource Use (includes measures in the current VBM program)
 Meaningful Use (meaningful use of a certified EHR would continue to apply)
 Clinical Practice Improvement Activities (a new reporting requirement)

31. 31
The ―Doc Fix‖:
Changing the Sustainable Growth Rate (SGR)
 Physicians receiving a ―significant portion‖ of their revenues as part of a
PCMH are exempt from MIPS assessment and may receive a 5% bonus from 2018 –
2023.
 To further recognize exceptional MIPs performance, $500 million is earmarked for
distribution based on scoring attainment.

32. The Path Forward – Collaboration
Everything is Connected to Everything
Value-based Reimbursement
Hospital Patients
Needs created
Opportunities For transformation of
clinical processes of care that Maximize Quality and Reimbursement
WHAT WHY HOW WHO
Physicians
Home
Healthcare
Rehabilitation &
Skilled Nursing
Hospice and
Palliative Care
Implications to: Implications to:

33. Charles Darwin
“It’s not the
strongest of the
species who survive,
nor even the most
intelligent, but the
ones most responsive
to change”

34. The Path Forward – Must Do!
1. Ensure individual and organizational understanding of quality reimbursement
policies and provisions contained in the PPACA – IF YOU WAIT TO ENGAGE YOU LOSE.
2. The solutions to challenges created by value-based Medicare reimbursement have yet to be created
3. Maximize quality based reimbursement – Play to your strengths. Continuous improvement of clinical processes
of care that to align with commercial and federal quality reimbursement initiatives.
4. Improve the Patient Experience – Physician Compare Website Fall of 2014. Your patients will be surveyed! For
hospitals this was the biggest contributor to VBP penalties and still struggle with this metric.
5. Break down the silo’s – internal/external and intellectual
6. Transference of skills from highly trained, but also expensive personnel to more affordable providers including
technology based care ex. Telemedicine
7. Shift away from certain high cost healthcare venues like hospitals into clinics and office settings, and, in some
cases, into patients’ own homes. (Ortho rehab)
8. Explore partnership opportunities with emerging care models endorsed by the PPACA
9. Align the analytics (QRUR Data) with your analytical skills to enhance your value proposition to payers