Quality & Practice

The Value Based Modifier and PQRS

The value-based modifier program will be a budget neutral payment modifier based on relative quality and cost of care. Medicare plans to adjust physician payments using quality data from the Physician Quality Reporting System (PQRS) and cost data from Medicare claims for fee-for-service patients. This is a pay for value (i.e., quality relative to cost) program—higher value gets higher pay; lower value gets lower pay.

Calculation of the Value Modifier

The VM is calculated for a group using a quality composite score and a cost composite score. The quality composite scores are derived from six quality domain scores; each domain score is based on performance scores for PQRS measures reported, using its associated domain. Quality tiering will determine if group performance is statistically better, the same, or worse than the national mean, based on standard deviation calculations.

Application of the Value Modifier in 2015

Beginning in 2017 and based on performance in 2015, the modifier must be applied to all physicians and physician groups

  • Groups with 2-9 EPs and solo practitioners receive only the upward or neutral VM adjustment

  • Groups with 10+ EPs can receive upward, neutral or downward VM adjustment.

  • All non-PQRS reporters receive an automatic -4% downward adjustment.

Value Modifier 2017 Adjustment Amounts


Low Cost

Average Cost

High Cost
Low Quality

+ 0.0%

- 2.0 %

- 4.0 %
Average Quality

+ 2.0 %

+ 0.0 %

- 2.0 %
High Quality

+ 4.0 %

+ 2.0 %

+ 0.0 %