Making the Most of MSPB

DATE: 10/01/2018

You may not know about MSPB, but focusing efforts there can lead to real savings

Now that bundled payment programs like the Oncology Care Model (OCM) and the Comprehensive Care for Joint Replacement (CJR) model have been in effect for some time, one factor is becoming clear: hospitals appear reluctant to participate. As of July 2018 reporting, the number of acute care hospitals who participated in the Bundled Payment for Care Initiative (BPCI) program was just 255—or less than 5 percent of all U.S. hospitals.

While those Inpatient Prospective Payment System (IPPS) hospitals not participating in bundled payment programs may think they don’t need to worry about episode spending programs, the simple fact is, if they’re receiving Medicare revenue, they’re already participating in one. Hospitals are responsible for visits related to a patient’s episode of care for 30 days following the episode as part of the Value-Based Purchasing (VBP) program,
and the efficiency of this care is measured by the program’s Medicare Spending per Beneficiary (MSPB) metric.

That may come as a surprise to many, as the majority of hospitals across the country either have no MSPB strategy or are convinced that the strategy they have will work. Unawareness of the program doesn’t excuse hospitals and health systems from participating—those organizations are being held accountable already. And even if there is an MSPB strategy in place, how effectively is it being monitored? Doing well in the VBP program first demands understanding of what MSPB is, and what impact it has on margins.


Understanding MSPB

The VBP program is measured through four equal domain weights, as demonstrated in Figure 1.

What’s important to note there is that the efficiency and cost reduction domain has only one measure: MSPB. That means that a full 25 percent of your 2% Medicare fee-for-service payment at risk for this VBP program is tied to meeting this metric.

MSPB is a price-standardized, risk adjusted measure the Centers for Medicare and Medicaid Services (CMS) designed to evaluate a hospital’s efficiency, as measured by program spending.

The program compares the average MSPB for the hospital to national benchmarks. As displayed in Figure 2, the time periods included in MSPB are: 3 days prior to admission, anchor hospital stay, and 1-30 days post discharge.

The MSPB is measured by taking all Medicare Part A and Part B spending that occurs during an episode of care—including pre-op care and visits, and extending to any and all related visits for 30 days following the care event.

CMS has demonstrated increasing emphasis on this measure in how it weighs its payments. VBP started in federal fiscal year (FFY) 2013, but the efficiency domain, which includes MSPB, wasn’t added until FFY 2015. Over time, its associated weight has grown, as demonstrated in Figure 3.

The MSPB measure’s importance has grown as a result of CMS placing less emphasis on process measures, and more on outcomes and efficiency measures—such as MSPB. Given that weight, ignoring performance metrics in this measure can be a risky and costly choice.


Building an effective strategy

An effective strategy is not solely about reducing hospital readmissions, it’s also about reducing the overutilization of Medicare post-acute services, particularly those associated with costly skilled nursing facilities and rehabilitation hospitals. To avoid the lost revenue associated with poor MSPB scores, stakeholders need an effective strategy for managing the care episode. One thing to remember: getting a better handle on that task requires making effective use of data to identify intervention opportunities. Here are a few tips to get there:

  • Ensure that your means of data collection are reliable.
  • Use the data collected and analyzed to the benefit of care efficiency and patient-centered clinical integration.
  • Unlock new insights through hospital-specific reports to evaluate Medicare’s SNF spend by provider organization and estimate patients’ SNF length of stay.

Avoiding MSPB losses is not an insurmountable challenge, and it’s well worth the effort of developing a solid strategy. In addition to improving patient care, and capturing more payments, the workflows and processes you set up can lay the groundwork for participating in a bundled
program—and potentially keep you ahead of the game as you do so.


Why healthcare executives can’t afford to ignore MSPB

There are two key reasons healthcare organizations need an effective MSPB strategy:

  1. It’s not going away. CMS is trying to make the VBP program and other quality programs “less burdensome” to providers by reducing some measures. CMS has determined that there are too many measures that provide little value to clinicians or patients. However, CMS did not eliminate or propose to eliminate MSPB.
  2. Its financial impact is real. As reported in Healthcare Financial Management, VBP could affect 2 percent of the Medicare severity DRG payment—meaning MSPB could impact .5 percent of a hospital’s case-mix adjusted base-operating payment. DataGen estimates the MSPB national impact in FFY 2018 is -$290,660,200. Since VBP is budget neutral nationally, there will be winners and losers.


Click here for your copy of Making the Most of MSPB. To learn more about what DataGen is doing to simplify the complexities of healthcare payment reform change, contact DataGen and follow us on LinkedIn.

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