MSPB: Another Look at Cost and Efficiency

Original story posted on: October 14, 2020

MSPB could be the “new normal” for length of stay.

We have all gotten to hear that phrase – a “new normal” – over the past 6-9 months, as we have dealt with the COVID-19 pandemic, and as tough as it is to admit, it is probably real. But maybe it’s time for a change, or at least a paradigm shift.

We all find ourselves getting caught up in the everlasting definition of insanity from time to time, “doing the same thing every day, yet expecting different results,” a line often misattributed to Albert Einstein. When it comes to length of stay (LOS), the same may apply. Stefani Daniels, Founder and Managing Partner of Phoenix Medical Management, Inc., recently published an article, “The Myth of Length of Stay, Revisited,” potentially leading us to a “new normal.”

Although there still remains a role for LOS in healthcare analytics, medical spending per beneficiary (MSPB) is another significant metric that even Medicare acknowledges is a good way to look at cost and efficiency, to measure hospitals’ performance across the continuum. In order to gain a better understanding of this concept, here is a little background:

  • On Jan. 26, 2015, in the U.S. Department of Health and Human Services (HHS) Blog, then-HHS Secretary Sylvia Mathews Burwell stated that “our first goal is for 30 percent of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide…linking nearly all payment to quality and value.”
  • Congress authorized the Inpatient Hospital Value-Based Purchasing (VBP) Program in Section 3001(a) of the Patient Protection and Affordable Care Act. The Program uses selected measures that were first specified under the Hospital Inpatient Quality Reporting (IQR) Program, which was originally authorized by Section 501(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
    • VBP is a budget-neutral program.
  • Since the initiation of VBP, the domain categories’ shares have changed. These are the quality domains and weights for FY 2020:
    • Clinical Outcomes (25 percent)
    • Person and Community Engagement (25 percent)
    • Safety (25 percent)
    • Efficiency and Cost Reduction (MSPB) (25 percent) 

In general, the overall goals of VBP were to:

  • Reduce adverse events and healthcare errors;
  • Encourage best patient outcomes;
  • Improve patient experience of care; and
  • Encourage and recognize hospitals that provide high-quality care at a lower cost to Medicare.

LOS has been defined as the length of an inpatient episode of care, calculated from the day of admission to the day of discharge, based on the number of nights spent in the hospital. This is not to be confused with the two-midnight rule, which may include both inpatient and outpatient episodes of care. LOS management is a multifaceted metric, and, according to Daniels, “overtreatment is a major contributor to excessive healthcare spending and adverse patient outcomes, and it adds more hours to LOS.”

MSPB, as mentioned above, is the efficiency and cost metric assessing Medicare Part A and Part B payments for services provided to a Medicare beneficiary for a specific episode, referred to as an “index” admission. Such an episode includes three specific components:

  • Episode initiation three days prior to an inpatient hospital admission
  • The inpatient admission
  • 30 days after discharge

There are seven claim types that are looked at for each of those three components:

  • Inpatient
  • Carrier
  • Skilled Nursing Facility (SNF)
  • Outpatient
  • Home Health Aide (HHA)
  • Hospice
  • Durable Medical Equipment (DME)

Medicare recently added MSPB as the final category in the Program for Evaluating Payment Patterns Electronic Report (PEPPER), and is also reported by the Centers for Medicare & Medicaid Services (CMS) on its Hospital Compare website – although it has been said to be of limited value, since the data in these reports is aged, according to Dr. Ronald Hirsch in 2018, when the metric first began being reported. Even though, in the most recent PEPPER, the data is from 2017 (according to the ST PEPPER User’s Guide, Twenty-Eighth Edition), there is still value in understanding where Medicare is going and how it is using it as a tool to start a paradigm shift.

By measuring cost of care through this measure, CMS hopes to increase the transparency of care for consumers and recognize hospitals that are involved in the provision of high-quality care at a lower cost to Medicare.

There is a comparison summary for each facility on that provides the VBP data. A sample report is below:

The bottom line is that neither LOS nor MSPB are the “magic sauce.” They are both very important, however, for reflecting the information that is needed for efficiency and cost-of-care evaluation. Hospital efficiency needs to increase, patient outcomes need to improve, and cost of care needs to decrease. Much of this falls under the umbrella of revenue cycle, specifically the areas of utilization review, case management, and clinical documentation integrity, with a helping hand from the physician advisor.

All can play a role in physician education, helping physicians to change their thinking away from “this is what I always have done.” There needs to be standardization and accountability. The airline industry did it. “No” is no longer an acceptable answer in getting individuals to change. Yes, physicians have diverse backgrounds, training, education, and other influences, but there are acceptable, evidence-based standards of care that should be in place. Healthcare and patient care is becoming less and less of a multiple-choice methodology. Standardization is imminent and necessary.  

What are next steps (and these are just a few)?

  • Executive support: a must!
  • Performing a gap analysis, asking:
    • Where are you now, and what is your baseline?
    • Where do you want to be?
    • How does one define success?
  • Look at your processes; these are just a few questions to ask:
    • What are your avoidable days?
    • What services are being duplicated?
    • What can be accomplished as an OP?
  • Identifying top problem physicians, DRGs, and service lines that need further review
  • Documentation, documentation, documentation
    • It’s a requirement, not an option

Today’s healthcare world is changing to a new normal – and that may not be a bad thing.

Programming Note: Listen to Dr. Zelem report this story live during Monitor Mondays, Oct. 19, 10 a.m. EST.

John Zelem, MD

Dr. John Zelem is a board-certified surgeon-turned healthcare consultant. He is the founder of Streamline Solutions Consulting, Inc.

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