Overview of the 2017 Value-Based Payment Modifier

The VM assesses both the quality of care furnished and the cost of that care during a performance period. The VM is an adjustment made on a per-claim basis to Medicare payments for items and services furnished under the Medicare Physician Fee Schedule (PFS). –High quality and/or low cost groups and solo practitioners can qualify for upward adjustments –Low quality and/or high cost groups and solo practitioners, including those that fail to satisfactorily report under the Physician Quality Reporting System (PQRS) are subject to downward adjustments The VM is applied at the Taxpayer Identification Number (TIN) level and applies to all physician groups and physicians (and beginning in 2018, to all non-physician eligible professionals (EPs)) billing under the TIN. What is the Value-Based Payment Modifier (VM)? 2

The following table outlines how and when the VM will be applied: What is the VM? (cont.) 3 Performance Period VM Payment Adjustment Period VM Applied To Physicians in groups with 100 or more EPs Physicians in groups with 10 or more EPs Physician solo practitioners and physicians in groups with 2 or more EPs; VM for physicians participating in the Medicare Shared Savings Program will be based on the ACO’s quality data and average cost; VM for physicians participating in the Pioneer ACO Model, Comprehensive Primary Care Initiative, or other similar Innovation Center models or CMS initiatives will be set to average quality and average cost To be finalized in future rulemaking 2018Physicians AND non-physician EPs who are solo practitioners or in groups with 2 or more EPs

Physician Doctor of Medicine, Doctor of Osteopathy, Doctor of Podiatric Medicine, Doctor of Optometry, Doctor of Dental Surgery, Doctor of Dental Medicine, and Doctor of Chiropractic Practitioner Physician Assistant, Nurse Practitioner, Clinical Nurse Specialist, Certified Registered Nurse Anesthetist (and Anesthesiologist Assistant), Certified Nurse Midwife, Clinical Social Worker, Clinical Psychologist, Registered Dietician, Nutrition Professional, and Audiologist Therapist Physical Therapist, Occupational Therapist, and Qualified Speech- Language Therapist What is an Eligible Professional (EP)? 4

2017 VM and the 2015 PQRS 5 CY 2017 VM payment adjustment, for physicians in groups with 2+ EPs and physician solo practitioners PQRS Reporters – 3 types 1a. Group reporters : Register for a PQRS GPRO (Web Interface, registry, or EHR) AND meet the criteria to avoid the 2017 PQRS payment adjustment OR 1b.Individual reporters in the group: at least 50% of EPs in the group report PQRS measures as individuals AND meet the criteria to avoid the 2017 PQRS payment adjustment 2. Solo practitioners: Report PQRS measures as individuals AND meet the criteria to avoid the 2017 PQRS payment adjustment PQRS Reporters – 3 types 1a. Group reporters : Register for a PQRS GPRO (Web Interface, registry, or EHR) AND meet the criteria to avoid the 2017 PQRS payment adjustment OR 1b.Individual reporters in the group: at least 50% of EPs in the group report PQRS measures as individuals AND meet the criteria to avoid the 2017 PQRS payment adjustment 2. Solo practitioners: Report PQRS measures as individuals AND meet the criteria to avoid the 2017 PQRS payment adjustment Non-PQRS Reporters 1. Groups: Do not avoid the 2017 PQRS payment adjustment as a group OR do not meet the 50% threshold option as individuals 2. Solo practitioners: Do not avoid the 2017 PQRS payment adjustment as individuals Non-PQRS Reporters 1. Groups: Do not avoid the 2017 PQRS payment adjustment as a group OR do not meet the 50% threshold option as individuals 2. Solo practitioners: Do not avoid the 2017 PQRS payment adjustment as individuals Mandatory Quality- Tiering Calculation Physicians in groups with 2-9 EPs and physician solo practitioners Physician in groups with 10+ EPs Physician in groups with 10+ EPs Upward or no VM adjustment based on quality-tiering (+0.0% to +2.0x ) Upward or no VM adjustment based on quality-tiering (+0.0% to +2.0x ) Upward, no, or downward VM adjustment based on quality-tiering (-4.0% to +4.0x) Upward, no, or downward VM adjustment based on quality-tiering (-4.0% to +4.0x) -2.0% (for physicians in groups with 2-9 EPs and physician solo practitioners) -4.0% (for physicians in groups with 10+ EPs) (Automatic VM downward adjustment) -2.0% (for physicians in groups with 2-9 EPs and physician solo practitioners) -4.0% (for physicians in groups with 10+ EPs) (Automatic VM downward adjustment) Note: The VM payment adjustment is separate from the PQRS payment adjustment and payment adjustments from other Medicare sponsored programs.

VM and the 2014 PQRS 6 CY 2016 VM payment adjustment, for physicians in groups with 10+ EPs PQRS Reporters – 2 types 1a. Group reporters: Register for a PQRS GPRO (Web Interface, registry, or EHR) AND meet the criteria to avoid the 2016 PQRS payment adjustment OR 1b. Individual reporters in the group: at least 50% of EPs in the group report PQRS measures as individuals AND meet the criteria to avoid the 2016 PQRS payment adjustment PQRS Reporters – 2 types 1a. Group reporters: Register for a PQRS GPRO (Web Interface, registry, or EHR) AND meet the criteria to avoid the 2016 PQRS payment adjustment OR 1b. Individual reporters in the group: at least 50% of EPs in the group report PQRS measures as individuals AND meet the criteria to avoid the 2016 PQRS payment adjustment Non-PQRS Reporters Groups do not avoid the 2016 payment adjustment as a group OR do not meet the 50% threshold option as individuals Non-PQRS Reporters Groups do not avoid the 2016 payment adjustment as a group OR do not meet the 50% threshold option as individuals Mandatory Quality-Tiering Calculation Physicians in groups with EPs Physicians in groups with 100+ EPs Upward or no VM adjustment based on quality-tiering (+0.0% to +2.0x ) Upward or no VM adjustment based on quality-tiering (+0.0% to +2.0x ) Upward, no, or downward VM adjustment based on quality-tiering (-2.0% to +2.0x ) Upward, no, or downward VM adjustment based on quality-tiering (-2.0% to +2.0x ) -2.0% (Automatic VM downward adjustment) -2.0% (Automatic VM downward adjustment) Note: The VM payment adjustment is separate from the PQRS payment adjustment and payment adjustments from other Medicare sponsored programs.

2015 VM and the 2013 PQRS 7 7 CY 2015 VM payment adjustment, for physicians in groups with 100+ EPs PQRS Reporters Groups register for PQRS GPRO Web Interface or registry AND report at least one measure OR elect the CMS-calculated administrative claims option PQRS Reporters Groups register for PQRS GPRO Web Interface or registry AND report at least one measure OR elect the CMS-calculated administrative claims option Non-PQRS Reporters Groups do not register for a PQRS GPRO OR do not report at least one measure via the Web Interface or a registry Non-PQRS Reporters Groups do not register for a PQRS GPRO OR do not report at least one measure via the Web Interface or a registry Upward, no, or downward VM adjustment based on quality-tiering (-1.0% to +2.0x ) Upward, no, or downward VM adjustment based on quality-tiering (-1.0% to +2.0x ) 0.0% (No VM adjustment) 0.0% (No VM adjustment) -1.0% (Automatic VM downward adjustment) -1.0% (Automatic VM downward adjustment) Note: The VM payment adjustment is separate from the PQRS payment adjustment and payment adjustments from other Medicare sponsored programs. No ElectionElect Quality- Tiering Calculation

Quality Measures: –Groups with 2 or more EPs: Measures reported through the PQRS Group Practice Reporting Option (GPRO) selected by the group OR individual PQRS measures reported by at least 50% of the EPs in the group (50% threshold option) –Solo practitioners: Individual PQRS measures reported by the solo practitioner –Three claims-based outcome measures: All-Cause Readmission, Composite of Preventable Hospitalizations for Acute Conditions, and Composite of Preventable Hospitalizations for Chronic Conditions –CAHPS for PQRS survey measures (Applicable only for groups that elect to use their 2015 CAHPS results in the calculation of their 2017 VM) Cost Measures: –Total per capita costs measure (Parts A & B) –Total per capita costs for beneficiaries with 4 chronic conditions (COPD, HF, CAD, and DM) –Medicare Spending Per Beneficiary measure (3 days before and 30 days after an inpatient hospitalization): Attributed to the group or solo practitioner providing the plurality of Part B services during the hospitalization –All cost measures are payment-standardized, risk-adjusted, and adjusted for the specialty mix of the EPs in the group What Measures will be Used to Calculate the 2017 VM? 8

VM Calculation Use domains equally weighted to combine each quality measure’s standardized score into a quality composite and each cost measure’s standardized score into a cost composite. Each composite is classified into “high”, “average”, or “low” based on whether the score is one standard deviation higher or lower than the benchmark and is statistically significantly different from the benchmark. 9

An automatic -2.0% VM downward adjustment will be applied for not meeting the satisfactory reporting criteria to avoid the 2017 PQRS payment adjustment. Under quality-tiering, the maximum upward adjustment is up to +2.0x (‘x’ represents the upward VM payment adjustment factor). Groups with 2-9 EPs and physician solo practitioners are held harmless from any downward adjustments under quality-tiering in VM Policies for Groups with 2-9 EPs and Solo Practitioners 10 * Eligible for an additional +1.0x if reporting PQRS quality measures and average beneficiary risk score in the top 25 percent of all beneficiary risk scores CY 2017 VM Amounts

An automatic -4.0% VM downward adjustment will be applied for not meeting the satisfactory reporting criteria to avoid the 2017 PQRS payment adjustment. Under quality-tiering, the maximum upward adjustment is up to +4.0x (‘x’ represents the upward VM payment adjustment factor), and the maximum downward adjustment is -4.0% VM Policies for Groups with 10+ EPs 11 CY 2017 VM Amounts * Eligible for an additional +1.0x if reporting PQRS quality measures and average beneficiary risk score in the top 25 percent of all beneficiary risk scores

Decide whether and how to participate in the PQRS in 2015 –Group reporting - Register for the 2015 PQRS GPRO between April 1, 2015 and June 30, Payment/PhysicianFeedbackProgram/Self-Nomination-Registration.htmlhttp:// Payment/PhysicianFeedbackProgram/Self-Nomination-Registration.html –Individual reporting – No registration necessary Decide which PQRS measures to report and understand the measure specifications – Instruments/PQRS/Downloads/PQRS_2015_Measure-List_ ziphttp:// Instruments/PQRS/Downloads/PQRS_2015_Measure-List_ zip Review quality measure benchmarks under the VM – Payment/PhysicianFeedbackProgram/ValueBasedPaymentModifier.htmlhttp:// Payment/PhysicianFeedbackProgram/ValueBasedPaymentModifier.html Download your 2013 Quality and Resource Use Report (QRUR) now, 2014 Mid- Year QRUR (April 2015), and 2014 QRUR (Late Summer 2015) at: – Payment/PhysicianFeedbackProgram/Obtain-2013-QRUR.htmlhttp:// Payment/PhysicianFeedbackProgram/Obtain-2013-QRUR.html Actions for Groups with 2+ EPs and Solo Practitioner in 2015 for the 2017 VM 12

Timeline for Phasing In the VM 13 January 1 VM applied to physicians in groups of > 100 EPs 1 st Quarter Complete submission of 2014 information for PQRS January 1 VM applied to physicians in groups of > 10 EPs 2014 PQRS GPRO Registration Period 4/1/ /3/ PQRS GPRO Registration Period 4/1/15 - 6/30/15 September 30, 2014 Retrieve 2013 QRUR that includes 2015 VM adjustment information (All physician groups and physician solo practitoners) Late Summer 2015 Retrieve 2014 QRUR that includes 2016 VM adjustment information (All groups and solo practitioners) January 1 VM applied to physician solo practitioners and physicians in groups of > 2 EPs 2016 PQRS GPRO Registration Period Spring - 6/30/16 Late Summer 2016 Retrieve 2015 QRUR that includes 2017 VM adjustment information (All groups and solo practitoners) 2017 PQRS GPRO Registration Period Spring - 6/30/ January 1 VM applied to physician & non- physician EPs in groups of > 2 EPs and physician & non-physician EP solo practitioners Late Summer 2017 Retrieve 2016 QRUR that includes 2018 VM adjustment information (All groups and solo practitoners) 2018 PQRS GPRO Registration Period Spring - 6/30/18 Late Summer 2018 Retrieve 2017 QRUR that includes 2019 VM adjustment information (All groups and solo practitoners)

For VM and QRUR questions, contact the Physician Value Help Desk: o Phone: 1(888) (select option 3) o Monday – Friday: 8:00 am – 8:00 pm EST For PQRS and IACS questions, contact the QualityNet Help Desk: o Phone: (866) (TTY ) o Monday – Friday: 8:00 am – 8:00 pm EST o VM and QRUR: PQRS Program: PQRS Payment Adjustment: Initiatives-Patient-Assessment-Instruments/PQRS/Payment-Adjustment- Information.htmlhttp:// Initiatives-Patient-Assessment-Instruments/PQRS/Payment-Adjustment- Information.html PQRS GPRO: Assessment-Instruments/PQRS/Group_Practice_Reporting_Option.htmlhttp:// Assessment-Instruments/PQRS/Group_Practice_Reporting_Option.html Technical Assistance Information 14

Appendix 15

Appendix A: VM Policies for 2015, 2016, and Value Modifier Components 2015 Finalized Policies 2016 Finalized Policies 2017 Finalized Policies Performance Year Group Size100+ EPs10+ EPs2+ EPs and solo practitioners Quality-TieringOptional: Groups with 100+ EPs that elect quality-tiering can receive upward, neutral, or downward VM adjustment. Mandatory: Groups with EPs receive only the upward or neutral VM adjustment (no downward adjustment). Groups with 100+ EPs can receive upward, neutral, or downward VM adjustment. Mandatory: Groups with 2-9 EPs and solo practitioners receive only the upward or neutral VM adjustment (no downward adjustment). Groups with 10+ EPs can receive upward, neutral, or downward VM adjustment. Peer Group for Categorizing Quality and Cost Composites Groups with 100+ EPsGroups with 10+ EPsGroups with 2+ EPs and solo practitioners Available Quality Reporting Mechanisms GPRO Web Interface, Qualified PQRS Registry, CMS-calculated Administrative Claims GPRO Web Interface, Qualified PQRS Registry, EHR, or 50% of EPs report under the PQRS as individuals Same as 2016

Appendix A: VM Policies for 2015, 2016, and 2017 (cont.) 17 Value Modifier Components 2015 Finalized Policies 2016 Finalized Policies 2017 Finalized Policies Outcome Measures NOTE: Performance on the outcome measures and measures reported through one of the PQRS reporting mechanisms will be used to calculate a quality composite score for the TIN for the VM. All Cause Readmission Composite of Acute Prevention Quality Indicators: (bacterial pneumonia, urinary tract infection, dehydration) Composite of Chronic Prevention Quality Indicators: (chronic obstructive pulmonary disease (COPD), heart failure, diabetes) Same as 2015 Patient Experience of Care Measures N/ACAHPS for PQRS: Optional for groups with 25+ EPs; Required for groups with 100+ EPs reporting via Web Interface. Groups may elect to include their 2014 CAHPS results in the calculation of the 2016 VM. CAHPS for PQRS: Optional for groups with 2-99 EPs; Required for all groups with 100+ EPs. Groups may elect to include their 2015 CAHPS results in the calculation of the 2017 VM.

Appendix A: VM Policies for 2015, 2016, and 2017 (cont.) 18 Value Modifier Components 2015 Finalized Policies 2016 Finalized Policies 2017 Finalized Policies Cost Measures Total per capita costs measure (annual payment standardized and risk-adjusted Part A and Part B costs) Total per capita costs for beneficiaries with four chronic conditions: COPD, Heart Failure, Coronary Artery Disease, Diabetes Same as 2015, and Medicare Spending Per Beneficiary measure (includes Part A and B costs during the 3 days before, through 30 days after discharge following an inpatient hospitalization) Same as 2016 Benchmarks Cost: 100+ EP TINs are compared against groups of 100+ EPs Quality: No differentiation by group size (“compared to everyone”) No differentiation by group size (“compared to everyone”) for both cost and quality measures Maximum Payment at Risk -1.0%-2.0%-2.0% (Groups with 2-9 EPs and solo practitioners) -4.0% (Groups with 10+ EPs) Application of the VM to Participants of the Shared Savings Program, Pioneer ACO Model, and the CPC Initiative Not Applicable Shared Savings Program: VM based on the ACO’s quality data and average cost; Pioneer ACO Model and the CPC Initiative: average quality/average cost

Appendix A: VM Policies for 2015, 2016, & 2017 (cont.) 19 Value Modifier Components 2015 Current Policy 2015 Finalized Policy 2016, 2017 Finalized Policy VM Informal Review Process: Timeline Not specified. After the dissemination of the annual Physician Feedback reports, a group of physicians may contact CMS to inquire about its report and the calculation of the value-based payment modifier. Deadline of February 28, 2015 for a group to request correction of a perceived error made by CMS in the 2015 VM payment adjustment. Establish a 60 day period that would start after the release of the QRURs for the applicable reporting period for a group or solo practitioner (as applicable) to request correction of a perceived error made by CMS in the determination of the group or solo practitioner’s VM for that payment adjustment period. VM Informal Review Process: If CMS made an error Not specified Classify a TIN as “average quality” in the event we determine that we have made an error in the calculation of quality composite. Recompute a TIN’s cost composite if CMS made an error in its calculation. Adjust a TIN’s quality tier. Recompute a TIN’s quality composite in the event we determine that we have made an error in the calculation of quality composite. Otherwise, the same as 2015.