Mercy Medical Center Redding, CA, can earn VBP incentives by reducing MSPB costs by 8.3%


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By: Debasish Choudhury  Jun. 10, 2021

Mercy Medical Center Redding, CA, reported a CMS Value Based Purchasing (VBP) adjustment factor of 0.9904 in the year 2021, which could result in an estimated penalty of $836,393. 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 Mercy Medical Center Redding during the period was 0/10. Dexur is an approved purchaser of CMS Medicare claims data and based on our simulator, we estimate that Mercy Medical Center Redding can avoid VBP penalties by reducing MSPB Cost by 8.3%.

Mercy Medical Center Redding’s average MSPB cost per episode (risk adjusted and price standardized) for the period of January 2019 to December 2019 was $22,039.The average cost of post Index Stays was $12,577 with a total of 4,629 episodes.

Dexur Simulator for MSPB Cost Reduction

Mercy Medical Center Redding can achieve the break-even VBP adjustment factor of 1 by earning 5 points in MSPB and thereby avoid VBP penalties to achieve incentives. 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:

In Summary, the four levers impact 672 episodes and reduce MSPB costs by 8.3% and improve the MSPB performance rate to 0.91. This increases the VBP adjustment factor to 1.0 and helps attain a perfect break even.

A higher reduction in Post Index stay costs can further improve the VBP score to attain incentives. For example, a 30% reduction in post index stay costs can reduce the average MSPB cost by 12.5%, and earn a VBP Adjustment Factor of 1.0033, thereby achieving an incentive of $287.5k.