Medicare Spending Per Beneficiary (MSPB)

By May 19, 2016Health

Medicare Spending Per Beneficiary (MSPB) is a measure of hospitals’ average spending compared to the national median after adjusting for factors such as age, sex, race, and severity of illness (1). MSPB includes all Medicare Part A and Part B costs starting 3 days prior to hospital admission through 30 days after discharge (3). MSPB is reported as a ratio, and a score of 1 means that the hospital’s spending is the same as the national median (1). Medicare releases each hospital’s MSPB-1 Performance Rate online along with other scores such as the MSPB-1 Achievement Points, Improvement Points, and Measure Score (4). These additional measures give patients a quantitative summary of how the hospital measures up against other hospitals and whether it has improved over time. People can then take these measures into account when choosing an appropriate physician.

MSPB is used as a measure of efficiency by the Hospital Value-based Purchasing (VBP) Program, which strives to improve healthcare quality by linking Medicare’s payment system to a value-based system (1, 2). According to Medicare, they use MSPB to “increase the transparency of care for consumers by recognizing hospitals that provide high quality care at lower costs to Medicare” (5). The Centers for Medicare & Medicaid Services’ (CMS’) use of MSPB ratings and the implementation of a value-based system encourages hospitals to provide the highest quality of care. Hospitals are compensated based on quality of care, not quantity of services (4). MSPB is the first pay-for-efficiency measure to penalize or reward hospitals (1). It accounts for 25% of a hospital’s Fiscal year (FY) 2016 VBP Report, which is an increase from 20% the year before (6). This report provides hospitals with a Total Performance Score (TPS), which is a factor in how funds are distributed.

Care providers must stay up to date on how their services will be evaluated. In 2014, more than 1,400 hospitals received reductions in their Medicare payment rates due partly to the implementation of a value-based system that evaluates efficiency (6). According to The Journal of the American Medical Association, most of the opportunity for increasing a hospital’s MSPB rating is during the post-acute care period, which is the period following an inpatient acute hospital stay. Hospitals are encouraged to “reevaluate their patterns of discharge timing, destination, and execution” (6). While shorter hospital stays may initially reduce costs, they may also result in more expensive post-acute care and a higher chance of readmission. Optimal healthcare decisions vary depending on each patient’s unique circumstance and environment. In order to obtain a good MSPB rating, physicians must balance providing adequate inpatient care with reducing unnecessarily costly care.

For anesthesia providers, it will be increasingly important to stay up to date with the various aspects of anesthesia management to ensure highest quality of care. As more anesthesiology research is conducted, physicians will be able to have a greater understanding of what procedure will be best for patients. In the future, it is likely that Medicare will tie more money to healthcare efficiency and continue to penalize high readmission rates (6). Physicians should reconsider the most appropriate care setting when discharging patients in an effort to reduce readmission. As MSPB ratings become increasingly more important, healthcare providers must emphasize studying the cost and outcomes of their patients to continually improve their services.