Physician Quality Reporting Initiative

The Physician Quality Reporting Initiative (PQRI) initiated by CMS in 2007 is another step towards the CMS goal of a Value-Based Purchasing (VBP), or Pay-for-Performance system.  In 2008 the PQRI is a voluntary program that pays participating providers a bonus for successfully reporting quality measures.

Currently, under the Medicare Physician Fee Schedule (MPFS), the Centers for Medicare and Medicaid Services (CMS) pays providers based on quantity and resources consumed. As discussed in Volume 3 Issue 6 of Oplinc’s Best Practices Review, the MPFS bases payment for each service on the resource costs necessary to provide the service as reflected by the assigned relative values (RVUs).

Through their VBP initiative CMS continues their efforts to convert Medicare from a passive payer to an active purchaser of healthcare. CMS has stated their belief that VBP will improve the quality of healthcare while avoiding unnecessary costs.

Goals of VBP:

  • Reduce adverse events and improve patient safety
  • Encourage more patient-centered care
  • Avoid unnecessary costs in the delivery of care
  • Stimulate investments in effective structural components or systems
  • Make performance results transparent and comprehensible
    • To empower consumers to make value-based decisions about their health care
    • To encourage hospitals and clinicians to improve quality of care

Under a value-based healthcare concept, purchasers of healthcare hold the healthcare provider accountable for both cost and quality of care. CMS offers the following equation for healthcare value:

Value = Quality / Cost

At CMS’ October 16, 2007 Town Hall Meeting, Thomas B. Valuck, MD, JD Director, Special Program Office for Value-Based Purchasing identified CMS’ vision to ensure:

The right care for every person every time, care that is:

  • Safe
  • Effective
  • Efficient
  • Patient-centered
  • Timely
  • Equitable

Strategies for achieving this vision as identified by Dr. Valuck:

  • Work through partnerships
  • Measure quality and report comparative results
  • Value-Based Purchasing: improve quality and avoid unnecessary costs
  • Encourage adoption of effective health information technology
  • Promote innovation and the evidence base for effective use of technology

Two key elements in VBP are:

  • Quality measurements including patient outcomes and health status and
  • Incentives to encourage higher quality and avoidance of unnecessary costs

Why Should I Participate in the PQRI?
You should consider participating in the 2008 PQRI because participation in this program will provide you with valuable experience in reporting quality measures. Remember, although this program is voluntary at this time it may be mandatory in the future. Alternatively, future programs may still be “voluntary” but with non-participating providers receiving a lower reimbursement rate than those that do participate.

Finally, participation in the 2008 PQRI allows your practice to earn a bonus payment while gathering valuable information about how your practice performs based on these evidence-based measures.  

Bonus Payment
Participating providers who successfully report the PQRI measures in 2008 can earn a bonus of 1.5% of their total Medicare allowed charges for services that are paid under the Medicare Physician Fee Schedule (MPFS) during the reporting period of January 1, 2008-December 31, 2008. Drugs and labs are excluded from the bonus calculation as they are not paid under the MPFS. Bonus payments will be made to the holder of the Taxpayer Identification Number (TIN) in a lump sum in mid-2009.

In 2007 the bonus payment was subject to a cap implemented to encourage more instances of reporting the quality measures (QM).

The cap calculation formula =
Individual’s instances of reporting quality data
National average per measure payment amount (NAPMPA)

National average per measure payment amount =
National total instances of reporting

The national aggregate cost of covered MPFS services on all claims containing QMs
The total number of instances of QM reporting

The NAPMPA dollar value will then be applied to all submitted claims containing a QM that is subject to the cap. You won’t be able to calculate the bonus cap now because the NAPMPA won’t be known until after the end of the reporting period. However, the example below illustrates how the cap will be calculated:

EXAMPLE: Let’s say a provider successfully meets the reporting threshold and submits a total of 10 claims with QMs and the NAPMPA is set at $50 (for the purpose of this example only), using the cap calculation the provider’s cap would be calculated as $1,500:


The 2008 MPFS Final Rule states that the 2008 PQRI bonus of 1.5% will be subject to the cap however, section 101(b)(2)(B) of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), removes the cap from the calculation of incentive payments in 2008 and 2009. In a letter to CMS Administrator Kerry Weems Senate Finance Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) called on the Centers for Medicare and Medicaid Services (CMS) to implement the expansions and improvements to the Physician Quality Reporting Initiative (PQRI) enacted in the MMSEA.

Choosing the Measures
Carefully review the 2008 PQRI Measures and Specifications in the Coding for Quality Handbook, on the CMS PQRI Web site. This handbook provides detailed information on the PQRI program, coding and reporting principals. The handbook also includes the following for each Quality Measure:

  • Reporting Description
    • Tells you which patients are eligible for the Quality Measure, includes narrative and eligible ICD-9 and/or CPT codes.
  • Performance Description
    • Tells you what must be performed to meet the Quality Measure, includes both narrative and specific coding options.
  • Implementation Guidelines
    • Provides step-by-step instructions for implementation, reporting and documentation requirements.

Example: Coding for Quality Handbook for Measure #73 Plan for Chemotherapy Documented Before Chemotherapy Administered

The PQRI section of the CMS Website contains regularly updated information on the PQRI program including the Measures/Codes Page containing updated 2008 PQRI Quality Measures Specifications. The QM Specifications include much of the same information found in the Coding for Quality Handbook but  also includes instructions identifying the clinicians who are expected to report the measure and the rationale for the measure.

Example: 2008 PQRI Quality Measures Specifications for Measure #73 Plan for Chemotherapy Documented Before Chemotherapy Administered

After identifying the Quality Measures that are applicable to your practice review the associated Quality Measures documents on the American Medical Association (AMA) Web site. For each Quality Measure the AMA has posted three documents:

  • Measure Description
    • This document identifies the patient population that qualifies for the measure, describes the Quality Measure, tells you what you need to report for each qualifying patient and whether there are any allowable performance exclusions for the measure.
  • Data Collection Sheet
    • The easy-to-use data collection sheet will help you determine if the individual patient is eligible, if the measure is met and which code (s) must be reported on the claim form.
  • Coding Specifications
    • This document lists all of the ICD-9, CPT and CPT II codes that are reportable for the individual quality measure. 

Example:  AMA Quality Measures Documents for Measure #73 Plan for Chemotherapy Documented Before Chemotherapy Administered

Coding Tips

  • CPT Category II codes may be reported on paper-based 1500 or electronic claims
    • They are to be included in the same location on the CMS-1500 Form as other CPT codes
  • The CPT Category II code, which supplies the numerator, must be reported on the same claim form as the payment ICD-9 and CPT Category I codes (eg, the office visit) which supply the denominator of the measures
    • Multiple CPT Category II codes can be reported on the same claim, as long as the corresponding denominator codes are also on that claim
  • CPT Category II codes have no unit values assigned to them, but the submitted charge field cannot be blank. The line item charge should be $0.00, if your system does not allow a $0.00 line item charge use a small amount like $0.01
  • Exclusion modifiers are reported in the usual modifier location
  • The individual NPI of the participating professional must be properly used on the claim
  • Quality data code line items will be denied for payment but then passed through to the National Claims History (NCH) file for PQRI analysis


Reporting Requirements

In 2008 the reporting period for the PQRI runs from January 1, 2008 through December 31, 2008. If no more than three PQRI Quality Measures apply to your practice you must report on each measure, if more than 3 measures apply you must report at least three measures.  Because there are more than three measures that are applicable to oncology practices most oncology practices will have to report on a minimum of three measures. 

To meet the reporting threshold you must report the measures you have chosen in at least 80% of cases in which the measure was reportable. 

What is the Difference between Successful Reporting & Successful Performance?
Don’t confuse “successful performance” with “successful reporting”. The PQRI is a pay-for-reporting program not a pay-for-performance program. For each eligible patient seen during the reporting period a determination of successful reporting and successful performance will be made.
Successful reporting means that you successfully reported an applicable Quality Measure for an eligible patient seen during the reporting period.
Successful performance means that you successfully met the performance measure for that Quality Measure.

Reporting instances where you report all the necessary quality data codes for the eligible patient encounter and you report that you did not meet the performance measure will still count as successful reporting.

How Do I Enroll?
You don't have to register or enroll in the PQRI, just choose the measures you will report on and begin reporting them.

Is it Too Late To Get Started?
Because the reporting period runs through December 31, 2008 you may be able to start reporting late and still meet the reporting threshold depending on which measures you choose and how good you are at identifying and reporting the measures each time they apply.

If you intend to participate in the PQRI thoroughly review all of the resources available on the CMS and AMA PQRI Web pages prior to submitting claims with the PQRI codes.

Centers for Medicare & Medicaid Services

American Society of Clinical Oncology

American Society of Hematology

American Medical Association


Risë Marie Cleland

315 W. Mill Plain Blvd.,
Suite 204
Vancouver, WA 98660
360.695.1608 office
360.695.6937 fax


Comments and suggestions for future issues are welcome, please forward correspondence to Risë Marie Cleland by email at: Rise@Oplinc.com


Volume 3 Issue 6
Volume 3 Issue 5
Volume 3 Issue 4
Volume 3 Issue 3
Volume 3 Issue 2
Volume 3 Issue 1
Volume 2 Issue 7
Volume 2 Issue 6
Resource Guide Issue 5
Volume 2 Issue 4
Volume 2 Issue 3
Volume 2 Issue 2
Volume 2 Issue 1


Risë Marie Cleland is the founder and President of Oplinc, a national organization of oncology professionals. Through Oplinc Ms. Cleland publishes the weekly Oplinc Fax Tracts focusing on the timely dissemination of information pertaining to billing, reimbursement and practice management in the oncology office and Oplinc’s Best Practices Review, which provides a more in-depth look at the issues and challenges facing oncology practices. Ms. Cleland also works as a consultant and advisor for physician practices, pharmaceutical companies and distributors.


Please note that this newsletter is presented for informational purposes only. It is not intended to provide coding, billing or legal advice. Regulations and policies concerning Medicare reimbursement are a rapidly changing area of the law. While we have made every effort to be current as of the issue date, the information may not be as current or comprehensive when you review it. Please consult with your legal counsel for any specific reimbursement information. For Medicare regulations visit: www.cms.hhs.gov.


CPT® is a Trademark of the American Medical Association Current Procedural Terminology (CPT) is copyright 2007 American Medical Association. All Rights Reserved. No fee schedules, basic units, relative values, or related listings are included in CPT. The AMA assumes no liability for the data contained herein.

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