Value-Based Payment Modifier

The Value-Based Payment Modifier (VM) program assesses both the quality and the cost of care under the Medicare Physician Fee Schedule. Starting in 2017, the VM program has been sunset and rolled into the Merit-based Incentive Payment System. The final payment year will be 2018, based on 2016 performance.

Who is affected

  • All physicians, regardless of practice size, are subject to the VM starting in 2017 based on 2015 performance
  • All physicians and non-physicians who are solo practitioners or in groups of two or more EPs are subject to the VM starting in 2018 based on their 2016 performance

How to Participate


  1. Choose a PQRS reporting mechanism and become familiar with the measures and data submission timeframes
  2. Decide whether and how to participate in PQRS
  3. Download your annual Quality and Resource Use Report
  4. Review quality measure benchmarks under the VM

How CMS Measures Quality of Care and Costs


Measuring Quality of Care
The VM and the PQRS programs are aligned. All physicians are evaluated on quality measures submitted through PQRS. The VM uses PQRS quality data and Medicare cost data to determine a provider's overall value score, rewarding high-performing providers with increased payments and penalizing low-performing providers with reduced payments.

Physicians who do not report quality measures through the PQRS program will be subject to automatic payment reductions under the VM.

Measuring Costs
Three sets of costs are assessed:

  1. Total per capita cost measures overall (Parts A & B)
  2. Total per capita cost measures for beneficiaries with four chronic conditions: chronic obstructive pulmonary disease, heart failure, coronary artery disease and diabetes
  3. Medicare Spending Per Beneficiary measure based on an index hospitalization, includes Part A and B costs for three days before and 30 days after an inpatient hospitalization. Attributed to a physician group providing plurality of Part B services during the inpatient admission. View a detailed methodology report

Note: The MSPB measure is the only cost measure that may be attributable to radiology groups. This cost measure is included in the 2016 VM and is based on the group’s 2014 services. An explanation of this measure can be found in the 2014 Quality and Resource Use Report.

How CMS Calculates Your Payment Modifier


The main tool that CMS uses to determine the VM amount is the Quality and Resource Use Report (QRUR). The VM amount is calculated based on data from two years prior; e.g., the 2018 VM amount is calculated based on quality and cost scores for 2016. View a sample QRUR.

QRURs are available to group practices and solo practitioners nationwide. Learn how to obtain your QRUR.

Value Modifier Payment Adjustments for 2017 and 2018


Payment adjustments may be applied in two cases:

  1. Eligible providers (EPs) and groups using the Group Practice Reporting Option (GPRO) who do not successfully report PQRS will receive an automatic downward adjustment (penalty).
    Note: For any group not registered for GPRO, at least 50% of the EPs in the group must participate in the PQRS as individuals and meet the criteria to avoid the 2018 PQRS negative payment adjustment (9 measures across 3 domains for 50% of all applicable patients)
  2. Through quality-tiering for those who do report PQRS successfully.

 Quality-tiering will determine if a group’s performance is statistically better, the same or worse than the national mean based on standard deviation calculations.


Value Modifier Penalty for 2015 and 2016 PQRS Non-Reporters

  • Groups with 2-9 EPs and solo practitioners: automatic -2.0% of MPFS downward adjustment
  • Groups with 10+ EPs: Automatic -4.0% of MPFS downward adjustment.

Mandatory Quality-Tiering and Possible 2017/2018 VM Payment Adjustment for Successful 2015/2016 PQRS Reporters
Using quality and cost composite scores, a group will be assigned one of nine possible ratings. The VM amount practices receive in 2017/2018 based on their 2015/2016 data will differ based on practice size.

For Groups Using the Group Practice Reporting Option (GPRO) in 2016
In order to earn an upward or neutral payment adjustment based on performance and avoid the automatic downward Value Modifier payment adjustment in 2018, EPs in the PQRS GPRO in 2016 must avoid the 2018 PQRS negative payment adjustment.

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