By: Sharath Joji  May. 19, 2021

South Shore University Hospital in Bay Shore, NY, reported a CMS Value Based Purchasing (VBP) Adjustment Factor of 0.9984 in the year 2021, which could result in an estimated penalty of $137,139. Medicare Spending Per Beneficiary (MSPB) accounts for 25% of overall VBP score and is a significant factor in driving VBP payments. MSPB costs include the costs from 3 days before hospitalization, index hospital stays, and 30 days post-discharge. The measure score of the Efficiency & Cost Reduction domain for South Shore University Hospital during the period was 0/10. Dexur is an approved purchaser of CMS Medicare claims data and based on our simulator, we estimate that South Shore University Hospital can avoid VBP penalties by reducing MSPB Costs by 2.2%.

South Shore University Hospital’s average MSPB cost per episode (risk adjusted and price standardized) during the period of January 2019 to December 2019 was $23,203. The average cost of Post Index Stays was $12,603 with a total of 4,553 episodes.

Dexur Simulator for MSPB Cost Reduction

South Shore University Hospital can achieve the break-even VBP adjustment factor of 1 by earning 1 points in MSPB and thereby avoid VBP penalties. Hospitals need to reduce post Index hospitalization costs to meet these MSPB reduction targets. Dexur’s simulator has identified four main levers and estimated reduction in each of these levers to reduce MSPB to the target levels and ultimately achieve a positive MSPB score:

• Reduction in Rehospitalizations: 5% reduction in rehospitalizations causes 0.4% reduction in MSPB cost and impacts 26 episodes.

• Shift from SNF discharge to Home: 5% shift causes 0.9% reduction in average MSPB cost and impacts 47 episodes.

• Shift from SNF discharge to Home Health: 5% shift causes 0.8% reduction in average MSPB cost and impacts 47 episodes.

• Shift from Home Health to Home: 5% shift causes 0.1% reduction in average MSPB cost and impacts 52 episodes.

In Summary, the four levers impact 172 episodes and reduce the average MSPB cost by 2.2% and improve the MSPB performance rate to 1.022. This increases the VBP adjustment factor to 1.0 and helps avoid all penalties.

A much higher reduction in Post Index stay costs can further increase VBP incentives. For example, a 9% reduction in post index stay costs can reduce the average MSPB cost by 3.9%, and earn a VBP Adjustment Factor of 1.0017, thereby achieving an incentive of $145.7k.