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24 posts from July 2012

July 31, 2012

Stop Tampering of Prescription Pills Act (STOPP)

Cutting Pills
As we have covered several times over the past few years, the abuse and overuse of painkillers, particularly opioids, has created significant financial and public health issues for our country.  

Opioids are widely prescribed and carry a risk of abuse, misuse and death.  In 2009, there were nearly 425,000 emergency department visits involving non-medical use of opioid analgesics. According to estimates from the Centers for Disease Control and Prevention, 14,800 Americans died from overdoses involving opioid pain relievers in 2008.  In 2009, there were 15,597 deaths involving an opioid medication. 

To address these issues, four members of the U.S. House of Representatives recently introduced legislation requiring most pain drugs to adopt abuse-deterring safeguards, the broadest congressional attempt at curbing the nation's prescription-drug problem.  According to the Wall Street Journal, the bipartisan bill seeks to eventually make most of the nation’s 137 million annual painkiller prescriptions feature some form of abuse deterrence, such as pills that are harder for abusers to crush open or inject.  The bill provides a framework for the Food and Drug Administration (FDA) to follow in dealing with drug companies, but it leaves vague the exact details of how drug makers could meet new standards. 


The Centers for Disease Control (CDC) reports that improper “use of prescription painkillers costs health insurers up to $72.5 billion annually in direct health care costs and opioid pain medications now kill more people than heroin and cocaine combined, and accounted for almost 74% of fatal prescription drug overdoses in 2008. 

As a first effort to address these issues, President Obama launched the national prescription drug abuse plan  in 2011 to combat prescription drug misuse and abuse.  More recently, FDA released its final Risk Evaluation and Mitigation Strategies (REMS) for extend-release (ER) and long-acting (LA) opioid medications.   This is the first time that the FDA has mandated a class wide REMS and much of what is recommended will be looked at closely for future class REMS.  

After input from many stakeholders dating back to November 2011, FDA also released the “Blueprint for Prescriber Continuing Education Program” regarding the use of opioids.  The Blueprint contains core messages intended for use by continuing education (CE) providers to develop educational materials to train prescribers of long-acting and extended release opioids under the required opioid REMS.   

In addition to these recent efforts, recent investigations and reports into opioid manufacturers caused Senators Max Baucus (D-MT) and Charles Grassley (R-IA), to send letters to three pharmaceutical companies, Purdue Pharma,  Endo Pharmaceuticals and Johnson & Johnson, as well as five groups that support pain patients, physicians or research: the American Pain Foundation (APF), American Academy of Pain Medicine, American Pain Society, Wisconsin Pain & Policy Studies Group, and the Center for Practical Bioethics

The Federation of State Medical Boards (FSMB), the trade group for agencies that license doctors, also received a letter, as did The Joint Commission, an independent nonprofit that accredits hospitals nationwide and made pain management a national priority in 2001.  The letters inquired into the nature of funding from these companies and educational materials that the patient support groups produced and gave to patients and doctors.   

New Legislation 

Under the legislation (H.R. 6160), also known as the “Stop Tampering of Prescription Pills Act (STOPP), pain medications that don’t adopt certain safety features would be removed from the FDA's approved list of generic drugs.  In other words, if a manufacturer submits a new drug application (NDA) or abbreviated new drug application (ANDA; for generic drugs), the manufacturer must include data demonstrating that the new drug is tamper resistant to a degree comparable to the listed drug.  Otherwise, FDA would be forced to deny approval of the application. 

As noted by the FDA Law Blog, the legislation also provides that: 

  • If a listed drug begins to utilize a tamper resistant formulation, any drug previously approved under an ANDA that refers to such listed drug must be deemed not therapeutically equivalent – and thus not substitutable – to the listed drug, unless and until the generic also begins to utilize a tamper resistant formulation;
  • If approval of a listed drug has been withdrawn, or if such drug is withdrawn from sale, after a tamper resistant version of that drug has been approved under another NDA, then such drug shall be considered withdrawn from sale for a safety reason;
  • FDA must refuse a suitability petition where the petition references a listed drug that utilizes an abuse deterrent formulation, and the new drug contains any active ingredient(s) that differ in any respect from those contained in the listed drug.  As a result, any such new drug must be approved under an NDA rather than an ANDA. 

Such laws could help slow the nation’s growing addiction to prescription painkillers, which killed more people in 2011 than heroin and cocaine combined. 

Only a handful of branded painkillers, such as Purdue Pharma LP's OxyContin or Endo Pharmaceuticals Inc.’s Opana, have in recent years been made with so-called tamper-resistant formulations.  Most of the generic painkillers, however, don't have such safeguards. 

“This bill should help protect first-time users and younger people who gain access through relatives or their own family's medicine cabinets,” said Rep. Bill Keating (D-MA), lead sponsor of the bill, in an interview.  The bill is also co-sponsored by Representatives Mary Bono Mack (R-CA); Stephen F. Lynch (D-MA); Nick J. Rahall II (D-WV); John Tierney (D-MA); and Edolphus Towns (D-NY).  The bill was referred to the House Committee on Energy and Commerce.  The article also noted that Rep. Hal Rogers (R-KY) is a co-sponsor. 

Congress is “understanding the scope of this and looking at it as a major public health epidemic,” Mr. Keating said. 

Abuse-deterrent safeguards are a timely issue.  Next year, patents for OxyContin and Opana are set to expire.  The FDA, which hasn’t ruled whether the abuse-deterrent features should be required on the generic versions, has said it would provide guidance by the end of this year. 

The article noted that the proposed bill “stops short of setting time lines for how quickly painkillers without abuse deterrents would have to comply. The legislation stipulates that the FDA and individual companies work out the timing.” 

“The proposed legislation would be detrimental to patients and could potentially remove FDA-approved safe and effective generic medicines from those who rely on them," said Ralph G. Neas, president of the Generic Pharmaceutical Association, an industry trade group.  “Addressing prescription-drug abuse is of utmost importance to the generic pharmaceutical industry.  Policy makers should let the medical evidence guide actions in addressing this critical issue,” he added. 

Recent legislation covering prescription-drug abuse has stalled in Congress.  Last month, the Senate unanimously approved tighter restrictions around the prescribing and dispensing of hydrocodone.  But the amendment, part of the reauthorization of the FDA’s user fees, was ultimately removed in the House version of the bill.  Opposition was loudest from pharmacist, supermarket and drugstore groups—not big pharmaceutical lobbyists, said Sen. Joe Manchin III (D., W.Va.), who proposed the amendment. 

“There are a lot of tentacles out there,” said Mr. Manchin, in an interview.

The reformulations of Opana and OxyContin have led to a drop in sales and abuse in Ohio, suggesting the safeguards are deterring addicts, said Orman Hall, director of the state’s department of Alcohol and Drug Addiction Services. He supports safeguards on painkillers.  “We are already awash in a sea of generic opioids, and adding another generic to the mix will not be helpful,” Mr. Hall said. 

Abuse-deterrent formulations are a neutral issue for legitimate pain patients, experts said.  “As long as the quality of the medication is the same, people aren’t going to care” if there is a tamper-resistant formulation, said April Rovero, president of the National Coalition Against Prescription Drug Abuse, a nonprofit that tries to build broader community awareness of painkiller misuse. 

A Purdue Pharma spokesman said the company did not increase the price of OxyContin when it released its reformulated product in August 2010.  The reformulated Opana also was sold at the same price as the original version after it launched earlier this year, an Endo spokesman said.


July 30, 2012

CMS Proposed Rule on Hospital Outpatients and Ambulatory Surgical Centers

Amblitory Surgical Center
The Centers for Medicare & Medicaid Services (CMS) recently proposed a rule that would update payment policies and rates for both hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) for calendar year (CY) 2013.  The proposed rule seeks to promote higher quality and more efficient services for Medicare beneficiaries. 

CMS projects that total payments for services furnished to Medicare beneficiaries in HOPDs during CY 2013 under the Hospital Outpatient Prospective Payment System (OPPS) will be approximately $48.1 billion, while total CY 2013 payments under the ASC payment system will be approximately $4.10 billion. 


Since August 2000, Medicare has paid hospitals for most services furnished in their outpatient departments under the OPPS. Medicare currently pays more than 4,000 hospitals – which includes general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children’s hospitals, and cancer hospitals – for outpatient services under the OPPS.  Medicare also pays community mental health centers (CMHCs) under the OPPS for partial hospitalization program (PHP) services. The OPPS payments cover facility resources including equipment, supplies, and hospital staff but do not pay for the services of physicians and nonphysician practitioners both of whom are paid separately under the Medicare Physician Fee Schedule (MPFS). 

Services under the OPPS are classified into payment groups called Ambulatory Payment Classifications (APCs).  Services in each APC are clinically similar and require the use of similar resources and a payment rate is established for each APC. The APC payment rates are adjusted for geographic cost differences, and payment rates and policies are updated annually through rulemaking. The final rule is generally issued by Nov. 1 each year and, unless otherwise specified, becomes effective Jan. 1 of the subsequent year. 

Beneficiaries generally share in the cost of services furnished under the OPPS by paying either a 20 percent coinsurance or, for certain services, a copayment which under the Medicare law may not exceed 40 percent of the total payment for the APC.  The copayment is gradually being replaced by the 20 percent coinsurance as the composition of APC groups is updated in response to policy changes or new cost data. CMS estimates that the overall beneficiary share of the total payments for Medicare covered hospital outpatient services will be about 21.6 percent in CY 2013. 

Significant Proposals for CY 2013 

Proposed Changes to Payment Rates under the OPPS in CY 2013 

Projected hospital outpatient payment rate increase due to the market basket update and required adjustments:  CMS is proposing to increase OPPS payment rates by 2.1 percent.  The rate increase is based on a statutory formula that equals the projected hospital market basket—an inflation rate for goods and services used by hospitals for hospital inpatient services paid under the hospital inpatient prospective payment system—of 3.0 percent less statutory reductions totaling 0.9 percent, including an adjustment for economy-wide productivity.  In addition, the NPRM proposes to continue the statutory 2.0 percentage point reduction in payments for hospitals failing to meet the hospital outpatient quality reporting (OQR) requirements. 

Change in payment methodology from median costs to geometric mean costs:   CMS is proposing to use the geometric mean costs of services within an APC to determine the relative payment weights of services, rather than the median costs that have been used since the inception of the OPPS.   CMS is proposing this change because geometric mean costs better reflect average costs of services than the median.  Geometric means are the basis of the Inpatient Prospective Payment System.  With more than a decade of experience under the OPPS, CMS believes hospital cost reporting is now sufficiently improved to allow us to make this change to geometric mean costs.  CMS’ analysis shows that the proposed change to geographic mean costs would have a limited payment impact on most providers, with a small number experiencing payment gains or losses based on their service-mix. 

Drugs and pharmacy overhead - For CY 2013, CMS is proposing to pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status at the statutory default of average sales price (ASP) plus 6.0 percent.  

Payment for partial hospitalization services - For CY 2013, CMS is proposing to update the four separate PHP ambulatory payment classification (APC) per diem rates, two for CMHCs PHPs and two for hospital-based PHPs, in order to support continued access to the PHP benefit, including a more intensive level of care.  The differences between the payment rates for CMHC and hospital-based PHPs reflect the differences in the cost structures for each setting. 

Inpatient/Outpatient Status - The proposed rule provides an update on the Part A to Part B Rebilling Demonstration.  Under current policy, hospitals are only allowed to bill for a limited list of Part B services following a denial of an inpatient stay as not reasonable and necessary.  The demonstration allows hospitals to bill Medicare for all Part B services and be paid 90 percent of what would otherwise be allowable.  The demonstration is in effect from 2012 through 2014.  In addition, CMS is soliciting public comments on policy changes that could potentially be made that would provide more clarity regarding patient status for purposes of Medicare payment. 

Proposed changes to Hospital Outpatient Quality Reporting Program

CMS is not proposing to add any new measures to those previously finalized for the CY 2014 and CY 2015 payment determinations.  Thus, CMS is proposing to require reporting of 23 measures for the CY 2014 payment determination and 24 measures for the CY 2015 payment determination.  CMS is proposing to defer data collection for one quality measure, OP-24 Cardiac Rehabilitation Patient Referral from an Outpatient Setting, for one year, and is confirming suspension of data collection for another, OP-19: Transition Record with Specified Elements Received by Discharged ED Patients.  

The proposed rule also clarifies CMS’s determination that public reporting of the claims-based imaging efficiency measure OP-15 will be deferred until July 2013 at the earliest, as discussed in the CY 2012 OPPS/ASC final rule with comment period.  CMS is also proposing program procedures affecting measure retirement, measure suspension, measure retention, and administrative forms.   The complete list of proposed measures is attached as an Appendix. 


There are approximately 5,000 Medicare-participating ASCs.   Since Jan. 1, 2008, ASCs have been paid under a revised ASC payment system that generally aligns payment in ASCs and hospital outpatient settings by basing ASC payment rates on the APC relative weights for similar services.  Under the revised ASC payment system, CMS also adopted criteria that allowed for more procedures and services to be covered when furnished in an ASC.   

The revised ASC payment rates were established to reflect the same relativity of resource use among procedures as under the OPPS, taking into consideration the lower costs of surgical procedures performed in ASCs and maintaining budget neutrality in the payment system.  In general, the revised ASC payment rate for a covered surgical procedure is based on the APC relative payment weights for the same procedure under the OPPS.  However, for device-intensive procedures (where the device accounts for more than 50 percent of cost), ASCs receive the same payment for the device as under the OPPS.  For ASC procedures that are predominantly performed in physicians’ offices, the ASC payment will generally be the lower of the amount paid for practice expense under the physician fee schedule or the amount paid under the standard ASC ratesetting methodology. 

Significant Proposals for CY 2013 

Proposed ASC payment rate updates:   For CY 2013, CMS is proposing to increase ASC payment rates by 1.3 percent or by the consumer price index for urban consumers (CPI-U) of 2.2 percent minus a multifactor productivity adjustment of 0.9 percent, as required by the Affordable Care Act.  CMS also estimates that for the third consecutive year, ASC payment rates in CY 2013 will be stable at 57 percent of payment rates for the same services at the proposed OPPS CY 2013 rates. CMS is asking for public comment on potential data that Medicare could collect to develop an inflation index that would explicitly measure ASC cost growth in place of the CPI­U, which is a measure of general economy wide consumer inflation. 


Proposed revisions to payment for new technology intraocular lenses:  CMS is proposing significant revisions to the regulations governing payments for new technology intraocular lens (NTIOLs), specifically § 416.195(a)(2) and § 416.195(a)(4).  Specifically, CMS is proposing to revise § 416.195(a)(2) to require that the IOL’s FDA-approved labeling contain a claim of a specific clinical benefit based on a new lens characteristic in comparison to currently available IOLs.  In addition, CMS is proposing to revise § 416.195(a)(4) to require that any specific clinical benefit referred to in § 416.195(a)(2) must be supported by evidence that demonstrates that the IOL results in a measurable, clinically meaningful, improved outcome.


Proposed ASC quality measure reporting:   In the OPPS final rule for CY 2012, CMS finalized an initial set of eight quality measures to be reported under the ASC Quality Reporting (ASCQR) Program, and five of these measures will apply to encounters beginning Oct. 1, 2012.  In April of this year, CMS issued a proposed rule for the Inpatient Prospective Payment System (IPPS) and Long-term Care Hospital Prospective Payment System (LTCH PPS) for fiscal year 2013 that included proposed administrative requirements for participation in the ASC program; these provisions will be addressed later this year in the IPPS/LTCH final rule.  

In this proposed rule, CMS is proposing additional requirements for the ASCQR Program including, procedural requirements that apply to the reporting of quality data, a policy for updating measures, and data completeness requirements.  CMS is also proposing a methodology for applying the 2 percent payment reduction when program requirements are not met.  CMS previously finalized the measure sets that apply to CYs 2014-2016 and is not proposing to make any changes to these measure sets. 


The OPPS/ASC proposed rule includes several proposals that would affect the IRF Quality Reporting Program.  Specifically, the proposed rule would:

  • Adopt updates on a previously adopted measure for the IRF QRP that will affect annual prospective payment amounts in FY 2014;
  • Adopt a policy that would provide that any measure that has been adopted for use in the IRF QRP will remain in effect until the measure is actively removed, suspended, or replaced; and
  • Adopt policies regarding when notice-and-comment rulemaking will be used to update existing IRF QRP measures. 


 For CY 2013, CMS is proposing several changes to the QIO program regulations (42 CFR Parts 476, 478, and 480), including:

  • adding provisions for processing beneficiary complaints that will give beneficiaries more information about the QIO’s review process,
  • adding a new alternative dispute resolution option, called Immediate Advocacy; giving QIOs the authority to send and receive secure transmissions of electronic versions of health information; and
  • giving beneficiaries the right to authorize the QIOs’ use and disclosure of confidential information.   

CMS believes the proposed changes will improve the QIO program and give beneficiaries better information regarding review activities. 


CMS is proposing to extend the 2012 Medicare EHR Incentive Program Electronic Reporting Pilot for Eligible Hospitals and CAHs through 2013 without changes. 

The proposed rule will appear in the July 30, 2012, Federal Register.  CMS will accept comments on the proposed rule until Sep. 4, 2012, and will respond to comments in a final rule to be issued by Nov. 1, 2012.

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July 27, 2012

CMS Proposed Rule on Physician Payment Policies

Physician payments
On July 6, 2012, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (MPFS) on or after Jan. 1, 2013.  The proposed rule also proposes changes to several of the quality reporting initiatives that are associated with MPFS payments – the Physician Quality Reporting System (PQRS), the Electronic Prescribing (eRx) Incentive Program, and the PQRS-EHR Incentive Pilot – as well as changes to the Physician Compare tool on the website. 

Finally, the proposed rule includes proposals for implementing the physician value-based payment modifier (Value Modifier) required by the Affordable Care Act that would affect payment rates to physician groups based on the quality and cost of care they furnish to beneficiaries enrolled in the traditional Medicare Fee-for-Service program. 

CMS issued a fact sheet discussing the proposals for phasing in the Value Modifier, beginning in CY 2015 with groups of physicians with 25 or more eligible professionals.  In this fact sheet, whenever a reference is made to “groups of physicians,” it means those groups with 25 or more eligible professionals.  The proposed rule will appear in the July 30, 2012 Federal Register.  CMS will accept comments on the proposed rule until Sep. 04, 2012, and will review and respond to all comments in a final rule with comment period to be issued by Nov. 1, 2012. 


Section 1848(p) of the Act, as established by section 3007 of the Affordable Care Act, requires the Secretary of Health and Human Services (“Secretary”) to establish a Value Modifier that provides for differential payment to a physician or group of physicians under the MPFS based upon the quality of care furnished to Medicare beneficiaries compared to the cost of that care during a performance period.  Further, the statute requires the Secretary to begin applying the Value Modifier on Jan. 1, 2015, with respect to items and services furnished by specific physicians and groups of physicians (as determined by the Secretary) and to apply it to all physicians and groups of physicians beginning not later than Jan. 1, 2017.  The statute also requires that the Value Modifier be implemented in a budget neutral manner meaning that upward payment adjustments for high performance will balance the downward payment adjustments applied for poor performance. 


In developing its proposals for the Value Modifier, CMS has focused on providing physicians choices as to how their quality of care will be measured and how their payments will be adjusted.  Physician groups can avoid all negative adjustments simply by participating in the PQRS. Physicians seeking to be paid according to their measured cost and quality may elect to do so for 2015.  CMS’ proposals are also designed to align with other CMS quality initiatives to reduce the burden of submitting information, and promote shared physician accountability for beneficiaries.  

Proposed Performance Period 

CMS previously established CY 2013 as the performance period for the determination of the Value Modifier to be applied in CY 2015 and proposes to use CY 2014 as the performance period for the Value Modifier to be applied in CY 2016.   CMS is proposing to apply the Value Modifier at the Tax Identification Number (TIN) level to items and services paid under the MPFS to physicians under that TIN.  This means that if a physician moves from one group to another between the performance period (2013) and the payment adjustment period (2015), the physician’s payment will be adjusted based on the Value Modifier earned by the TIN where the physician is practicing in 2015. 

Proposed Election on How the Value Modifier is Calculated for 2015 

In this first phase of implementation, CMS is proposing that groups of physicians with 25 or more eligible professionals would be included in the Value Modifier framework.  These groups, however, would have options, depending upon whether they satisfactorily report under the PQRS, regarding how their Value Modifier would be calculated for CY 2015 payment. 

Proposals for Measuring Quality of Care and Cost in the Value Modifier 

The law requires CMS to measure quality of care furnished as compared to cost using composites of appropriate quality and cost measures.  In the MPFS final rule for CY 2012, CMS adopted both a total per capita cost measure for all beneficiaries, as well as four   total per capita cost measures for beneficiaries with certain chronic conditions (chronic obstructive pulmonary disease, heart failure, coronary artery disease, and diabetes) to be used under the Value Modifier. 

To obtain the quality data, CMS is proposing that groups of physicians with 25 or more eligible professionals satisfactorily submit data using one of the proposed PQRS quality reporting mechanisms for groups of physicians: (1) a common set of quality measures based on clinical data and that focus on preventive care and care for prevalent and costly chronic conditions in the Medicare population; (2) quality measures of their own selection that they report through claims, registries, or EHRs, or (3) a common set of quality measures that focus on preventive care and care for chronic conditions that CMS would calculate from administrative claims data that require no action for the physician group beyond notifying CMS that the group elects this option. 

Additionally, CMS is proposing to assess each such group of physicians with 25 or more eligible professionals on quality measures relating to reducing potentially preventable hospital admissions for specific chronic and acute conditions, reducing hospital readmission rates, and increasing the frequency of hospital post-discharge visits.  

Value Modifier Payment Adjustments

To balance the goals of beginning the implementation of the Value Modifier in a way that is consistent with the legislative requirements and to give CMS and the physician community experience in its operation, CMS proposes to separate groups of physicians into two categories.  The first category would include those groups of physicians that have met the criteria for satisfactory reporting for an incentive under the options available to groups of physicians under the PQRS Group Practice Reporting Option.  In addition, this category includes groups that elect the new PQRS administrative claims-based reporting option.  CMS proposes to set the Value Modifier at 0.0 percent for these groups of physicians, meaning that the Value Modifier would not affect their payments under the MPFS, unless such groups of physicians elect the further evaluation of quality and cost of care described below.  

CMS proposes to provide groups of physicians that are satisfactory PQRS reporters with the choice of having their value-based payment modifier calculated using a quality tiering approach.  Choosing this option would allow these groups of physicians to earn an upward payment adjustment for high performance (high-quality tier and low-cost tier), and be at risk for a downward payment adjustment for poor performance (low-quality tier and high-cost tier).  In 2013, CMS will provide Physician Feedback reports to groups of physicians with 25 or more eligible professionals that preview their Value Modifier (based on 2012 data), prior to the deadline for electing the quality-tiering approach. 

The second proposed category would include those groups of physicians with 25 or more eligible professionals that have not met the PQRS satisfactory reporting criteria identified above, including those groups that do not submit any data on quality measures.  Because CMS would not have quality measure performance rates on which to assess the quality of care furnished by these groups of physicians, CMS proposes to set their Value Modifier at -1.0 percent.  This downward payment adjustment for the 2015 Value Modifier would be in addition to the -1.5 percent payment adjustment that is required under the PQRS for failing to meet the satisfactory reporting criteria.  Groups of physicians with 25 or more eligible professionals that fail to meet the PQRS satisfactory reporting criteria would, therefore, be subject to downward adjustments during 2015 of 1.5 percent (for not being a satisfactory reporter under the PQRS) and 1.0 percent (for the Value Modifier).   

Value Modifier Quality-Tiering Methodology 

For groups of physicians that request to have their Value Modifier calculated using a quality-tiering approach, CMS proposes to examine which groups of physicians have performance that is significantly above or below the national mean on each quality and cost measure using a standardized score approach.  This proposed approach takes into account the varying distributions of scores among physicians across different quality and cost measures. This method would focus the Value Modifier on the outliers in measures of both quality and cost. 

CMS is proposing to combine the standardized score for each quality measure into a quality composite using the domains included in the National Quality Strategy (clinical care, patient experience, population/community health, patient safety, care coordination, and efficiency).  In addition, CMS is proposing to combine the cost measures into a cost composite.  CMS proposes to differentiate the quality composite scores and cost composite scores into three performance tiers – high, average, and low – based on whether the composite score is significantly above or below the national mean. 

In order to achieve the legislatively-mandated budget neutrality for the program, positive adjustments to groups of physicians would be offset by negative adjustments to other groups of physicians.  Since the total sum of downward adjustments is unknown at this time, CMS is not proposing specific upward payment amount percentage.  Rather, as shown in the table below, CMS is proposing to give groups that are high quality and low cost the highest upward adjustment.  The value of “x” will depend on the total sum of negative adjustments in a given year.  In addition, to ensure that the Value Modifier encourages physicians to care for the severely ill and beneficiaries with complicated cases, CMS is proposing an additional upward payment adjustment for groups of physicians furnishing services to high risk beneficiaries.  


Since 2010, CMS has provided confidential Physician Feedback reports to certain physicians and groups of physicians.  The reports quantify and compare the quality of care furnished and costs among physicians and physician group practices, relative to the performance of their peers.   Starting in 2013, CMS anticipates using these reports to inform groups of physicians about their Value Modifier score. 

In September, 2011, CMS provided Physician Feedback reports (also known as “Quality and Resource Use Reports”) to the 35 large medical group practices (each with 200 or more physicians) that participated in the Physician Quality Reporting System Group Practice Reporting Option in 2010.  In March 2012, CMS disseminated feedback reports to 23,730 individual Medicare fee-for-service physicians in Iowa, Kansas, Missouri, and Nebraska.  The individual physician reports, in summary, showed that approximately 20 percent of beneficiaries received care from multiple physicians without a single physician directing their overall care, based on proportion of visits or costs.   These beneficiaries were also the highest risk and highest cost populations.   CMS believes the proposals for the Value Modifier encourage high quality and less fragmented care for these beneficiaries. 

CMS intends to include episode-based cost measures for several conditions in the Physician Feedback reports.   CMS is studying how “episode groupers” that would connect all claims for a beneficiary during a certain timeframe may be used in the reports and will seek input from stakeholders on the development and use of episode groupers before phasing these measures into the Value Modifier.

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