The 2 Main Levers To Reduce MSPB Costs


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Reducing Medicare Spending Per Beneficiary (MSPB) costs is crucial for hospitals, as SNF and readmission expenses constitute 80% of post-index costs. By focusing on these two levers, hospitals can achieve substantial savings and improve patient outcomes. Reducing SNF costs can be accomplished by facilitating early discharges to home or transitioning patients to home health services. To lower readmissions, hospitals should implement better clinical pathways, ensure medication adherence, and enhance care coordination. Dexur assists hospitals by providing real-time, detailed MSPB cost component benchmarks and DRG-level insights, allowing hospitals to compare performance with peers and target high-cost areas effectively.

The 2 Main Levers To Reduce MSPB Costs

The CMS Value-Based Purchasing (VBP) program applies a payment adjustment of up to 2% to Medicare reimbursements for participating hospitals. This adjustment is redistributed based on performance across several domains: clinical outcomes, patient experience, safety, and efficiency. Hospitals that meet or exceed performance benchmarks can earn back up to a 2% adjustment through incentives, while those that perform poorly may receive less or even face a penalty. This system aims to encourage hospitals to enhance care quality and operational efficiency, ultimately leading to better patient outcomes and resource utilization. Medicare Spending Per Beneficiary (MSPB) is a significant factor in driving Value-Based Purchasing (VBP) payments, as it accounts for 25% of the overall VBP score. You can read Dexur’s background primer on MPSB here.

MSPB costs are comprehensive, including expenses incurred three days prior to hospitalization, index hospitalization costs, and 30 days post-discharge costs. However, the real opportunity zone is in reducing the post-index costs to lower the total MSPB costs.

Post-index stay costs include several key components that contribute to the overall MSPB costs:

The Dominance of SNF and Readmission Costs in Post-Index Costs

A crucial insight for the MSPB Cost Reduction is that SNF and readmission costs account for approximately 80% of the post-index stay costs. Dexur’s analysis for all Hospitals in the country show strikingly similar patterns. Here is a table pulled from Dexur’s database for an example Hospital.

FY Entity Total Episode Costs Hospital Prior 3 Days Cost Hospital Index Hospitalization Cost Total Post Index Hospital Discharge Cost Post Index Hospital 30 days Readmission Cost (% of PIC) Post 30 days SNF Cost (% of PIC) Post 30 days Home Health Cost (% of PIC) Post 30 days Hospice Cost (% of PIC) Post 30 days Outpatient Cost (% of PIC)
2024 Acme Hospital $23,313 $84 $14,364 $8,865 $4,815 $2,639 $533 $359 $520

From the table, it is evident that the costs associated with rehospitalizations and SNFs dominate the post-index stay costs. For Acme Hospital, readmission costs constitute 54% of the post-index costs, while SNF costs account for 30%.

Reducing SNF Costs and Readmissions to Lower MSPB Cost

By focusing on the two main levers: Reducing SNF costs and Reducing readmission, healthcare providers can achieve substantial cost savings and improve patient outcomes.

Lever 1: Reducing SNF Costs

To minimize SNF costs, healthcare providers can focus on:

Lever 2: Reducing Readmissions

Strategies to reduce readmissions include:

By focusing on these strategies, healthcare providers can significantly decrease post-index stay costs, thereby lowering overall MSPB costs.

How Dexur Can Help?

Hospitals face several challenges when monitoring CMS programs, including delays in CMS VBP measure scores and payment adjustments, the complexity of replicating CMS algorithms, and the lack of essential post-discharge patient data. Additionally, CMS releases often contain stacked-up information, making it difficult for hospitals to analyze the factors affecting their scores and payment adjustments accurately. These issues hinder hospitals' ability to efficiently manage their performance and financial outcomes under CMS programs.

Dexur addresses these challenges by providing more recent and frequently updated data, replicating CMS algorithms using Medicare claims data, and tracking patients' longitudinal journeys. This enables hospitals to quickly evaluate their performance and monitor quality measures accurately. Furthermore, Dexur's detailed data allows for deep dives into specific diseases or DRGs driving MSPB outcomes, giving hospitals the insights needed to implement targeted interventions and improve both clinical and financial performance.

Dexur’s Post-Acute Care Network Quality & Cost Benchmarks

Dexur benchmarks the performance of Skilled Nursing Facilities (SNF) and Home Health Agencies in both costs and their influence on readmissions. By comparing the performance of local SNFs and Home Health Agencies against national performance metrics, Dexur enables hospitals to identify and select post-acute care providers that offer the best value. By focusing on readmission rates, Dexur helps hospitals partner with SNFs and Home Health Agencies that have lower readmission rates, reducing the overall cost of care. Dexur's analysis ensures that hospitals can choose partners that not only provide high-quality care but also help in achieving targeted expenditure under MSPB.

SNF and readmission costs play a pivotal role in the overall MSPB costs, accounting for a substantial 80% of post-index stay expenses. By utilizing the Dexur unified solution for MSPB Cost Reduction, hospitals can strategically target these high-impact areas to lower costs and enhance their VBP scores. This focused approach not only drives financial efficiency but also promotes better patient care and outcomes.

Early Guidance on MSPB Cost Trends with Dexur's CMS Data Access

Dexur's is an approved purchaser of Medicare claims data from CMS and enables hospitals to access early and precise insights into MSPB cost trends. This capability means hospitals do not have to wait for the final CMS-published numbers to understand how their costs are evolving. With timely data, hospitals can identify cost patterns and implement corrective measures more swiftly, ultimately enhancing their financial and clinical performance.

Leveraging more current CMS data, Dexur provides hospitals with a comprehensive overview of their MSPB costs, segmented by specific service areas such as SNF care and readmissions. This early guidance allows hospitals to monitor their cost metrics proactively and make data-driven decisions to address inefficiencies before they impact the bottom line. By having a continuous, up-to-date view of MSPB trends, hospitals can stay ahead of potential financial penalties and optimize their strategies for cost management and quality improvement.

DRG-Level Guidance on MSPB with Dexur's Current Data Analytics

Dexur's advanced analytics platform offers hospitals detailed Diagnosis-Related Group (DRG) level guidance on MSPB, providing actionable insights on a more current basis. By utilizing real-time CMS data, Dexur enables hospitals to drill down into specific DRGs to understand the cost dynamics and drivers associated with each patient category. This granular approach facilitates the precise identification of high-cost areas and opportunities for targeted interventions.

With DRG-level insights, hospitals can analyze MSPB metrics for various conditions and procedures, comparing their performance against regional and national benchmarks. This comparison helps identify deviations and inefficiencies, such as prolonged SNF stays or high readmission rates linked to particular DRGs. By addressing these specific issues, hospitals can implement focused strategies to reduce MSPB costs, optimize resource utilization, and improve patient outcomes, ensuring more effective and efficient care delivery.

Detailed MSPB Cost Components Benchmarks with Dexur

Dexur's platform excels in providing hospitals with detailed benchmarks of MSPB cost components, comparing their performance to similar peers. By analyzing Medicare claims data, Dexur breaks down MSPB costs into specific components such as inpatient, outpatient, SNF, home health, and readmissions. This granular level of detail enables hospitals to pinpoint where they are overspending compared to their peers and identify areas for potential savings.

Hospitals can use Dexur’s benchmarks to gain insights into how their cost components stack up against those of similar institutions. For example, if a hospital's SNF costs are significantly higher than the benchmark, Dexur's data can highlight the contributing factors, such as longer lengths of stay or higher utilization rates. By understanding these discrepancies, hospitals can implement targeted strategies to optimize their care delivery and reduce costs. This peer comparison approach fosters a competitive edge, driving hospitals to achieve best-in-class performance in managing MSPB costs.