HVBP’s First Efficiency Measure
Move over, cost, LOS—make room for ‘Medicare spending per beneficiary’
The unwritten rule in hospitalist circles is that lower cost and length of stay (LOS) mean higher efficiency, with hospitalists (me included) often pointing to one or both of these as a yardstick of performance in the efficiency domain. But if we lower hospital length of stay and costs while shifting costs to post-hospital care, have we solved anything?
This very question was raised by Kuo and Goodwin’s observational study that revealed that decreased hospital costs and LOS were offset by higher utilization and costs after discharge under hospitalist care.1
Efficiency As a Domain of Quality
Using the Institute of Medicine’s (IOM) six domains of quality as a framework (see Table 1, right), the Centers for Medicare & Medicaid Services’ (CMS) Hospital Value-Based Purchasing (HVBP) program seeks to encourage enhanced quality in all of the IOM domains. For HVBP 2015, we see the addition of the first measure in the domain of efficiency.
You may be saying to yourself, “It’s only 2013. Why should I worry about HVBP 2015?” Here’s why: The measurement periods for HVBP 2015 are May to December 2011 (baseline) and May to December 2013 (performance). Hospitals can succeed under HVBP if they demonstrate improvement from baseline or attainment, which indicates maintenance of a high level of performance despite no substantial improvement from baseline. Medicare spending per beneficiary (MSPB) will make up 20% of the 2015 HVBP incentive pool for hospitals.
Medicare Spending Per Beneficiary Instead of Costs or LOS
Why did CMS choose to use MSPB as a measure and not simply hospital costs or length of stay? Measuring efficiency of hospital care has proven to be a sticky wicket. If one simply measures and rewards decreased hospital costs and/or length of stay (which you might legitimately argue is exactly what the current DRG system does by paying a case rate to the hospital), one runs the risk of shifting costs to settings beyond the four walls of the hospital, or even fueling higher rates of hospital readmissions. Also, physician costs and other costs (therapy, home care) are not accounted for; they are accounted for under MSPB (described below). Finally, hospital costs and LOS vary substantially across regions and by severity of illness of the patients being analyzed. This makes it difficult to compare, for example, LOS in California versus Massachusetts.
The MSPB is designed to be a comprehensive and equitable metric:
- It seeks to eliminate cost-shifting among settings by widening the time period from three days prior to 30 days post-inpatient-care episode;
- It looks at the full cost of care by including expenses from both Medicare Part A (hospital) and Part B (doctors, PT, OT, home health, others);
- It incorporates risk adjustment by taking into account differences in patient health status; and
- It seeks to level the playing field by using a price standardization methodology that factors in geographic payment differences in wages, practice costs, and payments for indirect medical education and disproportionate share hospitals (those that treat large numbers of the indigent population).
Driving High Performance in Medicare Spending Per Beneficiary
Hospitalists straddle the Part A and Part B elements of Medicare; they have one foot in the hospital and one foot in the physician practice world. They should be able to improve their hospitals’ performance under the MSPB yardstick. Since the performance measurement period starts in May, now is the time to sharpen your focus on MSPB.