So long 2014, welcome 2015; out with the old, in with the new; and for physicians, goodbye carrot, hello stick. This year marks the unofficial end to the incentive phase and the official beginning to the penalty phase of the Meaningful Use (MU), Physician Quality Reporting System (PQRS), and Value-Based Payment Modifier (VBM) programs.

While the past few years Medicare has offered incentive payments for participation in the MU and PQRS programs, 2015 marks the first year the agency will be penalizing those providers who have failed to participate or comply with the requirements of each of these three programs.  It’s important to remember that while the incentives were only intended to act as temporary “carrots” to encourage initial provider participation, the penalties are intended to act as permanent “sticks” or value-based adjustments to Medicare’s fee-for-service payments to physicians.  As such, it’s important to understand the changing application of, and policies associated with, these programs so you can maximize your chances of succeeding as we transition from the “carrot” to the “stick.”

By now, most providers are familiar with the MU program, but some still may be unfamiliar with the PQRS and VBM programs.  Congress created both programs to act as value-based adjustments to Medicare payments based on quality reporting: PQRS penalizing providers for failing to submit certain quality measures and the VBM adjusting payments up or down based on how the quality measures submitted by a provider compare to those of his or her peers.  And just like the meaningful use program, the performance year for these programs precedes the payment year by two years — adjustments to payments in 2015 being determined by performance in 2013.  Similarly, performance in 2015 will affect payment in 2017.

To illustrate the financial impact, I created this chart to summarize the application of these programs by performance and payment year.

Chart for Chris Emper Blog Post


As you can see, the negative financial impact increases over time.  Physicians in large group practices will have 9% of their 2017 Medicare reimbursement at risk in these programs in 2015.  And as we all know, in today’s extremely challenging reimbursement environment, this 9% Medicare adjustment could define success or failure for a practice.

What can you do to make sure you succeed in these programs?

First, make sure to educate yourself on the each program so you can truly understand the impact your performance has on Medicare payments, when you can expect the impact, and what resources are available to help you succeed and be compliant.  CMS has some valuable information and resources on its website worth reviewing, but sometimes CMS materials can be lengthy and difficult to understand.

Here at NextGen Healthcare, we are committed to not only help you understand these programs, but also to provide you with the tools and the assistance needed to succeed.  Each month, I and other members of the NextGen Healthcare Government Relations and Health Reform Team offer a “Healthcare Reform Simplified” webinar dedicated to educating clients on important policy issues such as the above mentioned programs.  Our Health Quality Measures (HQM) product offers a comprehensive quality reporting solution that can help you satisfy the reporting requirements for these programs. Our physician consulting services can also be a valuable source of help to navigate these complex programs.

Each of these resources should help you leverage the carrot… and avoid the stick in 2015.