Laws enacted since 2006 have directed CMS to collect performance information on providers and eventually reward quality and efficiency of care rather than reimburse for volume of services alone. The Tax Relief and Health Care Act of 2006 required the establishment of the Physician Quality Reporting System (PQRS) to encourage physicians to successfully report data needed for certain quality measures. PQRS applies payment adjustments to promote reporting by eligible Medicare professionals (EP)—including physicians, nurses, physical therapists, and others. In 2013, EPs could report data to PQRS using claims, electronic health records (EHR) or a qualified registry, or opt for CMS to calculate quality measures using administrative claims data. Under its group practice reporting option, CMS allows EPs to report to PQRS as a group, either through a registry or a web-based interface. The Medicare Improvements for Patients and Providers Act of 2008 established the Physician Feedback Program, under which CMS was required, beginning in 2009, to distribute confidential feedback reports, known as Quality and Resource Use Reports (QRUR), to show physicians their performance on quality and cost measures. The Patient Protection and Affordable Care Act required HHS to coordinate the Physician Feedback Program with a Value Modifier (VM) that will adjust fee-for-service (FFS) physician payments for the relative quality and cost of care provided to beneficiaries. In implementing the VM, CMS’s Center for Medicare intends to use PQRS and cost data from groups of EPs defined at the taxpayer identification number level to calculate the VM and then report the payment adjustments in the QRURs. As required in the act, CMS plans to apply the VM first to select physicians in 2015 and to all physicians in 2017. As required by law, CMS implemented a performance feedback program for Medicare physicians, which serves as the basis for eventual payment adjustments. (See fig. 1.) In our December 2012 report on physician payment incentives in the VM program, we found that CMS had yet to develop a method of reliably measuring the performance of physicians in small practices, that CMS planned to reward high performers and penalize poor performers using absolute performance benchmarks, and that CMS intended to annually adjust payments 1 year after the performance measurement period ends. We recommended that CMS develop a strategy to reliably measure the performance of small physician practices, develop benchmarks that reward physicians for improvement as well as for meeting absolute performance benchmarks, and make the VM adjustments more timely, to better reflect recent physician performance. CMS agreed with our recommendations, but noted that it was too early to fully implement these changes. Private entities we reviewed provided feedback mostly to groups of primary care physicians practicing within newer delivery models. Each entity decided which measures to report and which performance benchmarks to use, leading to differences in report content across entities. Largely relying on claims data, health insurers spent from 4 to 6 months to produce the annual reports. To meet the information needs of physicians, they all provided feedback throughout the year. The entities also generally offered additional report detail and other resources to help physicians improve their performance. The private entities in our review had discretion in determining the number and type of physicians to be included in their performance reporting initiatives, and their feedback programs generally included only physician groups participating in newer delivery models—medical homes and ACOs—with which they contract. Within this set of providers, the entities used various approaches to further narrow the physician groups selected to receive performance feedback. For example, one entity told us that only physician groups accredited by a national organization focused on quality were eligible for participation in its medical home program, which included physician feedback reports. Private entities’ feedback programs were generally directed toward primary care physician practices. One entity defined primary care as family medicine, internal medicine, geriatrics, and pediatrics; and included data on the services furnished by nurse practitioners and physician assistants in its medical group reports. The entities indicated that they rarely provided reports directly to specialty care physician groups. Among those that did, the programs typically focused on practice areas considered significant cost drivers—obstetrics/gynecology, cardiology, and orthopedics. Entities further limited their physician feedback programs to groups participating in medical homes with a sufficient number of attributed enrollees to ensure the reliability of the reported measures. In medical home models, enrollees are attributed to a physician (or physicians) responsible for their care, who is held accountable for the quality and cost of care, regardless of by whom or where the services are provided. Among those entities we spoke with, the minimum enrollment size for feedback reporting varied widely, with most requiring a minimum of between 200 and 1,000 attributed enrollees to participate in the program. For example, one entity had two levels of reporting in its medical home program, differentiated by the number of attributed enrollees. In one medical home model, the entity required more than 2,000 attributed enrollees for participation and rewarded the practices through shared savings. In a second medical home model, the entity included practices with fewer than 1,000 attributed enrollees, but these practices did not share in any savings. According to the entities in our study, small physician practices (including solo practitioners) typically received performance reports for quality improvement purposes only. Because smaller practices may not meet minimum enrollment requirements needed for valid measurement, private entities generally did not link their performance results to payment or use them for other purposes. For example, one entity provided feedback to practices of one to three primary care physicians upon request, but did not publicly report these practices’ data on its website. To increase the volume of patient data needed for reliable reporting, some entities pooled data from several small groups and solo practitioners and issued aggregate reports for those small practices. Most of the entities that used this method said they applied their discretion in forming these “virtual” provider groups; however, another entity commented that allowing small practices to voluntarily form such groups for measurement purposes would be advantageous. Because each private entity in our study determined the number and types of measures on which it evaluated physician performance, the measures used in each feedback program differed. Each entity decided on quality measures to include, and many also identified utilization or cost measures for inclusion.ACOs to choose 8 to 10 measures from among a set of about 18 measures. To assess physicians’ quality and utilization/cost results, the entities used absolute or relative performance benchmarks. Private entities generally report on physician quality using many more process of care measures than outcomes of care measures. Entities in our review commonly included indicators of clinical care in areas such as diabetes care, cardiovascular health, and prevention or screening services for both their adult and pediatric patients. The most common measure reported by all entities was breast cancer screening, followed by hemoglobin A1C measures, a service used to monitor diabetes. We found wide variation in the number and type of measures in private entities’ quality measure sets. The total number of quality measures used in the feedback reports ranged from 14 to 51. Measures typically fell into one of several measurement areas, each with as few as one or as many as 20 individual measures. For example, in the quality measurement areas for pulmonary and respiratory conditions, one private entity reported on a single measure (appropriate use of medications for asthma), while another reported three measures (appropriate use of medications for asthma, appropriate testing for pharyngitis, and avoidance of antibiotic treatment for adults with acute bronchitis). Although primarily focused on clinical quality measures, entities also included nonclinical measures, such as patient safety and patient satisfaction. (See app. II for more information on the number and types of quality measures included in sample reports provided by the entities we reviewed.) Even when entities appeared to report on similar types of measures in common areas, we found considerable variability in each measure’s definition and specification. For this reason, results shown in physician feedback reports may not be comparable across entities. As shown in figure 2, the diabetes hemoglobin A1C measure was defined and used in different ways in our selected entities’ reports. In some cases, entities calculated the percentage of enrollees with diabetes within a certain age range that received the test. In other cases, the entities calculated the percentage of enrollees with diabetes within a certain age range that had either good or poor control of the condition, as determined from a specified hemoglobin A1C result. In addition, some entities defined their diabetic patient population as enrollees from 18 to 75 years of age, while another did not indicate the age range, and one entity set the age range from 18 to 64 years of age. Some, but not all, private entities in our review included utilization or cost measures in their performance reports to physicians. Total cost of care per enrollee was the most commonly used measure, but cost measures disaggregated by type of service—facility, pharmacy, primary care physician, and specialty—were also used. Some entities described how they limited their reporting of a total cost of care measure to those medical groups with a large number of enrollees. In one case the minimum enrollment size was 20,000 enrollees and in another it was 2,500 enrollees. Officials from one entity also told us that they allowed smaller physician practices to combine their data in order to meet the required number of enrollees for receiving feedback on cost of care. In addition to feedback on the total cost of care per enrollee, some reports given to groups of primary care physicians contained information on the cost of care provided by specialists in the entity’s network. For example, one entity provided trend data that included the number of specialist visits (total and by type) and the number of patients with one or more visits for these specialty areas. (See fig. 3.) For the two specialties with the most enrollee visits during the measurement period—orthopedic surgery and dermatology—the entity also provided the medical group with data on which specialists were seen most frequently and their cost per visit. This information was intended to encourage cost-efficient referrals.