As mandated under the Patient Protection and Affordable Care Act, CMS is working to establish a separate, budget-neutral payment modifier to the Medicare physician fee schedule that would affect reimbursement to physicians based on the relative quality and cost of care they furnish. The physician value-based payment modifier (VBPM) combines quality measures with a payment adjustment under the Medicare fee schedule.

As directed by statute, the secretary of Health and Human Services is to evaluate the quality of care based on a composite of appropriate cost measures that not only would eliminate the effect of geographic adjustments in payment rates, but also would take into account risk factors. The latter include socioeconomic and demographic characteristics, ethnicity, and health status of individuals.

Quality and Resource Use Reports (QRURs) will provide the quality-related feedback to be used with the payment modifier to adjust physician payments. The QRURs use quality data from the Physician Quality Reporting System (PQRS) and claims data from Medicare fee-for-service patients to compare physicians to other physicians within their specialty.

The proposed calendar year 2013 Physician Fee Schedule includes proposals for phasing in the VBPM during a two-year period beginning in January 2015 with groups of physicians with 25 or more eligible professionals (EPs). As proposed, the value-based payment modifier will apply to data collected during the 2013 reporting period. Under the statute, the modifier must be applied to all physicians and physician groups by Jan. 1, 2017.

CMS publishes current information about the value-based modifier on its website.