Dale SchumacherMedicare spending per beneficiary (MSPB) performance rates can have a dramatic impact on a healthcare organization’s financial picture. MSPB reports, furnished by the Centers for Medicare & Medicaid Services (CMS) are even more consequential when hospitals evaluate multiple years and identify trends so they can be better faster. CMS will soon provide the sixth year of MSPB reports, for calendar year 2017 (CY17), but even two or three years are revealing. 

MSPB is the sole measure in CMS’s value-based purchasing (VBP) Efficiency and Cost Reduction domain, which counts for a full 25 percent of the potential VBP incentive payment. MSPB measures compare standardized claims paid during a patient’s episode with the amount predicted based on diagnosis, multiple risk adjustments, age, and more. Higher MSPB scores mean lower efficiency and can mitigate the bonuses from the other Fern NerhoodMSPB domains—Clinical Care, Experience of Care, and Safety. Better efficiency and improved MSPB scores can lead to higher VBP incentive payments and improved quality. MSPB also is a measure of physician performance and will affect physician payments under the Merit-based Incentive Payment System (MIPS) program. MSPB will be worth 30 percent in 2022 and has the potential to be worth 10 to 30 percent from 2019 to 2021.a

MSPB Trends

Because VBP is budget neutral, there are winners and losers, so hospitals should work to make fast improvements and sustain them. An analysis of hospital MSPB results from year to year discloses fascinating results. The exhibit below shows that, of the 3,126 hospitals that had MSPB scores in at least both CY15 and CY16, only 204 hospitals (7 percent) had sustained improvement for three years in a row (e.g., decreasing MSPB scores of 1.005, 0.990, and 0.985). Conversely, 171 hospitals (5 percent) had sustained deterioration for three years in a row (e.g., increasing MSPB scores of 0.980, 1.022, and 1.034). Hospitals with deterioration for one or more years should take full advantage of the MSPB Hospital Specific Reports and data files they receive from CMS. There is urgency because MSPB affects both the hospital and physicians who are not participating in an alternative payment model (APM).

Hospital MSPB Trends CY 2013 Through CY 2016 Sustained Improvement or Deterioration 1 to 3 Years for 3,126 Hospitals with at Least CY 2015 CY 2016 Data
Hospital MSPB trends CY 2013 through CY 2016 sustained improvement or deterioration 1 to 3 years for 3,126 hospitals with at least CY 2015 CY 2016 data

The 204 hospitals with three years of sustained improvement had a lower average indirect medical education (IME) ratio than that for the 171 hospitals with three years of sustained deterioration. That means that, on average, the improving hospitals had fewer residents per bed. The improving hospitals also had a lower average disproportionate share (DSH) ratio. Finally, their average number of Medicare cases was slightly higher. Improving MSPB at hospitals that are challenged by higher IME and DSH ratios requires special attention to overcome these complexities. 

Analyzing MSPB Data

Rather than just capturing spending during a hospital stay, MSPB tracks spending over an episode of care. The episode includes paid claims for three days before the admission, care during the admission, and care for 30 days after discharge. CMS documents these periods of care and compares them with state and national averages. CMS also breaks down the data by claim type (e.g., inpatient, carrier). If a hospital’s percentages are significantly different from national, then there is a clue to which segment and claim type is raising the cost of care. 

If a patient visits a hospital and then—within 30 days of discharge—is admitted to a different hospital, the costs incurred at the second hospital are included within the index episode started at the first hospital. When this happens, the first hospital’s percentage for 30 days after discharge can be higher than expected. Insightful investigation of the CMS-provided Index Admission, Episode, and Beneficiary Risk data files can reveal these events and even identify the secondary hospitals and subacute care facilities.

Next, hospitals can use multiple years of their Hospital Specific Report to analyze major diagnostic category (MDC) service lines to identify performance trends that are affecting their MPSB scores and VBP payments. The two or three MDCs with inefficient care paths warrant further analysis. Hospitals should determine what is causing observed spending to be higher than expected and analyze the data to measure the effects of different care pathways after discharge.

Hospitals that have deteriorating MSBP scores are missing out on up to 25 percent of their potential VBP incentive payments. There is a great need for understanding the MSPB measure by decoding the data, finding trends, and making fast improvements.


Dale N. Schumacher, MD, MPH, is president, Rockburn Institute, Elkridge, Md.

Fern Nerhood, MBA, MSW, is director, management services and senior analyst at Rockburn Institute, Elkridge, Md. 

Footnotes

a. United States, Senate. 115th Cong., 2d Sess., Bipartisan Budget Act of 2018. Section 51003 Technical Amendments to Public Law 114-10. (a)(1)(C)(ii)(II) pp. 599-600.

Publication Date: Wednesday, May 16, 2018