What is the Value-based Payment Modifier?

The value-based modifier program is a budget neutral payment modifier based on relative quality and cost of care. Quality and Resource Use Reports will provide the quality-related feedback. Medicare plans to adjust physician payments using quality outcomes data from the Physician Quality Reporting System (PQRS) and cost data from Medicare claims for fee-for-service patients.

According to the Patient Protection and Affordable Care Act, the modifier must be applied to all physicians and physician groups by January 1, 2017. This is a pay for value (i.e., quality relative to cost) program– higher value gets higher pay; lower value gets lower pay, based on quality tiering.

In 2019 and beyond, the value-based payment modifier will be replaced by the merit-based incentive payment system (MIPS).

The Centers for Medicare & Medicaid Services site (www.cms.gov) has more information on the value-based payment modifier.

Performance Year Value Modifier Year Physician Group Size Possible Value Modifier Outcomes
2013 2015 100+ EPs
  • Downward Adjustment max -1% for those elected quality-tiering OR max -1% non-satisfactory PQRS reporting
  • No Adjustment for those who do not elect quality-tiering OR those who elected quality-tiering and were classified as average quality/average cost
  • Upward Adjustment for those elected quality-tiering (max +2 x 4.89%*)
2014 2016 100+ EPs
  • Downward Adjustment (max -2%)
  • No Adjustment
  • Upward Adjustment (max +2x%*+)
    10+ EPs
  • Downward Adjustment (max -2% non-satisfactory PQRS reporting)
  • No Adjustment
  • Upward Adjustment (max +2x%*+)
2015 2017 10+ EPs
  • Downward Adjustment (max -4%)
  • No Adjustment
  • Upward Adjustment (max +4x%*+)
    2-9 and solo practitioners
  • Downward Adjustment (-2% non-satisfactory PQRS reporting) 
  • No Adjustment
  • Upward Adjustment (max +2x%*+)
2016 2018 All groups and solo practitioners
  • Downward Adjustment (% TBD)
  • No Adjustment
  • Upward Adjustment (% TBD)

* Eligible for an additional +1.0x if average beneficiary risk score is in the top 25% of all beneficiary risk scores

+The value of “x” represents the adjustment factor still yet to be determined and depends on the total sum of negative adjustments in a given year.


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