While there are many regulatory programs that will soak up a lot of healthcare organizations’ time and resources over the next year, there are a few that haven’t received as much attention as others. Certainly everyone is familiar with Meaningful Use and ICD-10, but there are aspects of the Affordable Care Act that are just now coming into focus. A prime example is the value-based modifier program. There is some confusion surrounding this Centers for Medicare and Medicaid Services (CMS) project, especially what’s involved, why it’s important and what organizations should be doing to prepare.

In a nutshell, the value-based modifier program will use cost and quality data to calculate a portion of Medicare payments for physicians, helping CMS take a further step toward value-based payment. More specifically, the program will:

  • Provide for differential payment under the Medicare Physician Fee Schedule based on the quality of care an organization provides versus the actual cost of that care
  • Rank participant data, with the top performers receiving a bonus while the bottom incurs a penalty, allowing the program to remain budget-neutral
  • Make results public on the CMS website
  • Allow physicians in larger groups that submit claims to Medicare under a single tax identification number to be subject to the value modifier in 2015, based on their performance in calendar year 2013

There are several reasons why organizations should be aware of this program. First, the payments in 2015 are dependent on the care an organization provides right now. So, this program is not something that is happening in the future: it is underway as we speak. Second, the program has a direct impact on revenue. If organizations rank higher against their peers, they stand to increase revenue. However, if they rank below other organizations, they could lose out. Finally, since an organization’s ranking will be public information, performance with the value-based modifier program may shape public perceptions, negatively affecting an organization’s reputation if it scores below average.

To gear up for the value-based modifier program, organizations should not only work to enhance their quality versus cost, but make sure they have a reporting methodology in place that communicates an accurate and timely picture of organizational performance. In other words, organizations should take a close look at what they are currently doing and make sure reporting outputs align with what the value-based modifier program is looking for. Even if an organization delivers high quality care every day, if it can’t report data on paper to reflect the quality of care provided, the organization may find itself behind.