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The Value-Based Payment Modifier from the Centers for Medicare and Medicaid

The value-based payment modifier (VBPM) was established as a part of the Affordable Care Act (ACA) to introduce the concept of value-based payment for physician services in the Medicare program. The VBPM must be budget neutral, meaning that upward payment adjustments for higher quality and lower costs will balance the downward adjustments applied for lower quality and higher costs.

The VBPM relies on Physician Quality Reporting System (PQRS) participation for the purposes of reporting quality, and in many cases requires PQRS Group Practice Reporting (GPRO) participation. In 2016, the second year of this program, group practices (a single TIN) with 10 or more eligible professionals (EPs) will be subject to the VBPM based on their performance in 2014 on Centers for Medicare and Medicaid (CMS) quality, outcomes and cost measures. The 2016 penalty for this program is 2% of the physician’s Part B covered professional services under the Medicare physician fee schedule (PFS).


 The following physician practices will be affected by this payment modifier as follows:

  •  2015: group practices with 100 or more (EPs)
  •  2016: group practices with 10 or more EPs
  • 2017: all Medicare FFS physicians


CMS is required to provide confidential reports to physicians that measure the resources involved in furnishing care to Medicare FFS beneficiaries, as well as quality information. These reports also illustrate how a group practice would perform under the physician VBPM. In September of 2013, CMS made 2012 quality and resource use reports (QRURs) available to groups (with a single TIN) with 25 or more EPs. CMS expects to make 2013 QRURs available to all individual physicians and groups of physicians in late summer 2014.

This is a first step towards rewarding improved quality and efficiency when providing care to patients. We expect further efforts to reduce health care costs and increase the quality of care to patients through additional business models to be introduced in the future.

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