[Solved] understanding mspb and readmission

Medicare was established in 1965 after President Lyndon B Johnson signed a legislation for the Social Security Act. This is when Americans began receiving Medicare as their health coverage. Not just 12 months later did more Medicare coverage for hospital and medical insurance benefits take off. Medicare is comprised of four different parts available for patients who are 65 years or older. There are exceptions to Medicare that include patients who are under age 65 with certain disabilities and patients of any with end-stage renal disease. Medicare is made up Part A that covers inpatient hospital care, Part B that covers doctors’ service and outpatient care, and Part D that is prescription drug coverage. There is a Medicare Part C offered with is a plan that will pay for some health services that Medicare may typically not cover under the original coverage (CMS Medicare Program, 2018). It should be known that Medicare coverage varies by state.

Medicare uses sperate payment rates and systems for each providers reimbursement. Medicare part A uses their reimbursement based under the inpatient prospective payment system. This is where they look at a prospective payment per beneficiary discharge. The rate is then determined by CMS based off over 700 diagnosis related groups. This is where a comparison of a patients age, sec, secondary diagnosis and services is taken in to account for reimbursement. Medicare part B uses the outpatient prospective payment system. This is better known as the Physician Fee Schedule. This is where they look at other reimbursement rates of similar services and clinical factors to determine the payment.

It is important for us to first have an understanding of what Medicare Spending per Beneficiary (MSPB) really means and entails. This is information that you can obtain by visiting http://hospitalcompare.hhs.gov/staticpages/for-consumers/value-based-purchasing.aspx . Here you are able to get statics and data on spending breakdowns for spending per hospital patient with Medicare. You can search by claim type. It contains detailed information about every hospital’s average spending levels (CMS, 2018).

Medicare Spending per Beneficiary was created by Center for Medicare & Medicare Services along with a team of highly skilled clinical and statistical experts from Acumen, LLC. Acumen, LLC is a company that offers government agencies health related expertise in a variety of areas. It was created to help measure and evaluate hospitals’ efficiency compared to the national median of other hospitals’ efficiency. MSPB looks at the cost of services that are performed by a hospitals and other providers during that beneficiaries stay. It looks at the various cost and spending levels in regard to different factors such at a patient’s case or geographic location in Medicare payment levels (Measure Methodology Reports, 2018).

Medicare programs such as these are used as both an incentive and penalty program in order to improve quality based on how you look at it. When value-based reimbursement is being used in a hospital then they are subject to their performance. Payments are adjusted in correlation to a hospital’s performance in their clinical care, patient experience, patient safety and efficiency. This where a hospital’s use of Hospital Readmission Reduction Program comes into play.

This program included the Affordable Care Act. It was established to help with hospitals producing quality care to their patients no matter their social class and coverage. HRRP gives penalties to hospitals that have a high volume of readmission rates compared to the average. The thought behind this program is that if patients are receiving outstanding care the first time that they will not be readmitted since nothing should have been missed. There have been several studies done to see if this theory played out in a positive way. The New England Journal of Medicine published an article of a study that had been done from October 2007 to May 2015 among Medicare beneficiaries. Where they compared hospitals monthly on their readmission rates and observation services that were used within 30 days after the patient was discharged. This was their results they published, “We analyzed data from 3387 hospitals. From 2007 to 2015, readmission rates for targeted conditions declined from 21.5% to 17.8%, and rates for nontargeted conditions declined from 15.3% to 13.1%. Shortly after passage of the ACA, the readmission rate declined quickly, especially for targeted conditions, and then continued to fall at a slower rate after October 2012 for both targeted and nontargeted conditions. Stays in observation units for targeted conditions increased from 2.6% in 2007 to 4.7% in 2015, and rates for nontargeted conditions increased from 2.5% to 4.2%. Within hospitals, there was no significant association between changes in observation-unit stays and readmissions after implementation of the ACA. Readmission trends are consistent with hospitals’ responding to incentives to reduce readmissions, including the financial penalties for readmissions under the ACA. We did not find evidence that changes in observation-unit stays accounted for the decrease in readmissions (Zuckermann, Sheingold & Ruther, 2016)” This study really shows the benefit of these types of programs to increase quality care for Medicare patients and programs.

Center for Medicare & Medicaid services are able to initiate these types of programs under the legislation under federal agencies within the United States Health and Human Services who work along side with their state government as well. There are nine steps in calculating the MSPB for a hospital. These steps are as follows (Fee for Service Payment, 2015):

  1. Calculate payment-standardized MSPB episode costs.
  2. Calculate expected MSPB episode costs.
  3. Calculate risk-adjusted MSPB Amounts for each TIN.
  4. Calculate the specialty-adjusted expected cost for each TIN.

You can visit https://www.medicare.gov/hospitalcompare/search.html there you will find you can put in your zip code to locate hospitals in your area. Once you enter in a zip code you will see that it populates hospitals around that location. You are able to add hospitals to a compare list where you can see a side by side comparison of the hospitals you chose. You are able to compare in formation for these categories: General information, surveys of patient experiences, timely and effective care, complications and deaths, unplanned hospital visits, use of medical imaging and payment & value of care. You can then see these statistics next to each other for ease of research. Along with those categories you are able to click on them and pick a more specific category within that tab.


  1. CMS. (2018, July 25). Value Based Programs. Retrieved January 29, 2019, from https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Value-Based-Programs.html
  2. Fee-for-Service Payment payment. (2015). Encyclopedia of Public Health,448-448. doi:10.1007/978-1-4020-5614-7_1142
  3. Measure Methodology Reports. (2018, September). Retrieved January 29, 2019, from http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic/Page/QnetTier4&cid=1228772057350
  4. Medicare Program – General Information. (2018, June 01). Retrieved January 29, 2019, from https://www.cms.gov/Medicare/Medicare-General-Information/MedicareGenInfo/index.html
  5. RevCycleIntelligence. (2018, December 17). The Difference Between Medicare and Medicaid Reimbursement. Retrieved January 29, 2019, from https://revcycleintelligence.com/features/the-difference-between-medicare-and-medicaid-reimbursement
  6. Zuckermann, R., Sheingold, S., & Ruther, J. (2016, April 21). Readmissions, Observation, and the Hospital Readmissions Reduction Program | NEJM. Retrieved January 29, 2019, from https://www.nejm.org/doi/full/10.1056/NEJMsa1513024

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