Nationwide Hospital Performance on Publicly Reported Episode Spending Measures
BACKGROUND: Medicare has implemented strategies to improve value by containing hospital spending for episodes of care. Compared with payment models, publicly reported episode-based spending measures are underrecognized strategies.
OBJECTIVE: To provide the first nationwide description of hospitals’ episode-based spending based on publicly reported Clinical Episode-Based Payment (CEBP) measures.
DESIGN, SETTING, AND PARTICIPANTS: We used 2017 Hospital Compare data to assess spending on six CEBPs among 1,778 hospitals. We examined spending variation and its drivers, correlation between CEBPs, and spending by cost performance categories (for individual CEBPs, below vs above average spending; for across-CEBP comparisons, high vs low vs mixed cost). We also compared hospital spending performance on CEBPs with a global Medicare Spending Per Beneficiary measure.
MAIN OUTCOMES AND MEASURES: Episode spending. RESULTS: Episode spending varied by CEBP type, with skilled nursing facility (SNF) care accounting for the majority of spending variation for procedural episodes but not for condition episodes. Across CEBPs, greater proportions of episode spending were attributed to SNF care at high- (18.1%) vs mixed- (10.7%) vs low-cost (9.2%) hospitals (P > .001). There was low within-hospital CEBP correlation and low correlation and concordance between hospitals’ CEBP and Medicare Spending Per Beneficiary performance.
CONCLUSIONS: Variation reduction and savings opportunities in SNF care for procedural episodes suggest that they may be better suited for existing payment models than condition episodes are. Spending performance was not hospital specific, which highlights the potential utility of episode spending measures beyond global measures.
© 2020 Society of Hospital Medicine
Amid the continued shift from fee-for-service toward value-based payment, policymakers such as the Centers for Medicare & Medicaid Services have initiated strategies to contain spending on episodes of care. This episode focus has led to nationwide implementation of payment models such as bundled payments, which hold hospitals accountable for quality and costs across procedure-based (eg, coronary artery bypass surgery) and condition-based (eg, congestive heart failure) episodes, which begin with hospitalization and encompass subsequent hospital and postdischarge care.
Simultaneously, Medicare has increased its emphasis on similarly designed episodes of care (eg, those spanning hospitalization and postdischarge care) using other strategies, such as public reporting and use of episode-based measures to evaluate hospital cost performance. In 2017, Medicare trialed the implementation of six Clinical Episode-Based Payment (CEBP) measures in the national Hospital Inpatient Quality Reporting Program in order to assess hospital and clinician spending on procedure and condition episodes.1,2
CEBP measures reflect episode-specific spending, conveying “how expensive a hospital is” by capturing facility and professional payments for a given episode spanning between 3 days prior to hospitalization and 30 days following discharge. Given standard payment rates used in Medicare, the variation in episode spending reflects differences in quantity and type of services utilized within an episode. Medicare has specified episode-related services and designed CEBP measures via logic and definition rules informed by a combination of claims and procedures-based grouping, as well as by physician input. For example, the CEBP measure for cellulitis encompasses services related to diagnosing and treating the infection within the episode window, but not unrelated services such as eye exams for coexisting glaucoma. To increase clinical salience, CEBP measures are subdivided to reflect differing complexity when possible. For instance, cellulitis measures are divided into episodes with or without major complications or comorbidities and further subdivided into subtypes for episodes reflecting cellulitis in patients with diabetes, patients with decubitus ulcers, or neither.
CEBPs are similar to other spending measures used in payment programs, such as the Medicare Spending Per Beneficiary, but are more clinically relevant because their focus on episodes more closely reflects clinical practice. CEBPs and Medicare Spending Per Beneficiary have similar designs (eg, same episode windows) and purpose (eg, to capture the cost efficiency of hospital care).3 However, unlike CEBPs, Medicare Spending Per Beneficiary is a “global” measure that summarizes a hospital’s cost efficiency aggregated across all inpatient episodes rather than represent it based on specific conditions or procedures.4 The limitations of publicly reported global hospital measures—for instance, the poor correlation between hospital performance on distinct publicly reported quality measures5—highlight the potential utility of episode-specific spending measures such as CEBP.
Compared with episode-based payment models, initiatives such as CEBP measures have gone largely unstudied. However, they represent signals of Medicare’s growing commitment to addressing care episodes, tested without potentially tedious rulemaking required to change payment. In fact, publicly reported episode spending measures offer policymakers several interrelated benefits: the ability to rapidly evaluate performance at a large number of hospitals (eg, Medicare scaling up CEBP measures among all eligible hospitals nationwide), the option of leveraging publicly reported feedback to prompt clinical improvements (eg, by including CEBP measures in the Hospital Inpatient Quality Reporting Program), and the platform for developing and testing promising spending measures for subsequent use in formal payment models (eg, by using CEBP measures that possess large variation or cost-reduction opportunities in future bundled payment programs).
Despite these benefits, little is known about hospital performance on publicly reported episode-specific spending measures. We addressed this knowledge gap by providing what is, to our knowledge, the first nationwide description of hospital performance on such measures. We also evaluated which episode components accounted for spending variation in procedural vs condition episodes, examined whether CEBP measures can be used to effectively identify high- vs low-cost hospitals, and compared spending performance on CEBPs vs Medicare Spending Per Beneficiary.
