AAMC Contacts: Jennifer Faerberg Medicare Spending per Beneficiary Hospital Compare Release April, 2012

The Affordable Care Act (ACA) states the Secretary must ensure that efficiency measures are included in a hospital value-based purchasing program The statutory language requires the use of Medicare Spending per Beneficiary measures (MSPB) CMS proposed to include the MSPB measure in VBP for FY2014, but has delayed implementation Once the measure is implemented it will be the singular measure in the efficiency domain Background

Based on episodes of care 3 days prior to admission through 30 days post discharge Includes all part A and B services (including outlier payments) Utilizes Medicare Advantage risk-adjustment which adjusts for age and co-morbid conditions (HCCs) Uses standardized pricing Scores are calculated based on a hospitals’ average spending across all eligible episodes compared to the national median Determining Spending Amount 3

IME and DSH payments Transfers between acute care hospitals Patients who died during episode Statistical outliers Exclusions 4

Each hospital’s score is ratio Ratios are calculated based on a hospitals’ average spending across all eligible episodes compared to the national median Interpreting scores: 1 = Spending is about the same as the national median >1 = Spending is MORE than the national median < 1 = Spending is LESS than the national median Determining the Spending Ratio 5

Note: N = 3,374 hospitals. Source: AAMC analysis of Hospital Compare and AAMC member data - April Min Max 2.07 HIGHER spend per patient compared to national median LOWER spend per patient compared to national median National Distribution Medicare Spending Per Beneficiary – All Hospitals Discharges May 2010-February 2011

COTH Spend Slightly Higher Ratio LOWER spend per patient compared to national median HIGHER spend per patient compared to national median Note: COTH members (integrated, independent and specialty) n= 260 Source: AAMC analysis of Hospital Compare and AAMC member data - April COTHNon-COTH Min Max Max LOWER spend per patient compared to national median HIGHER spend per patient compared to national median Ratio

COTH hospitals range of scores is much tighter than the spread for hospitals nationwide The average spending for COTH hospitals is slightly higher than the national median Key Takeaways 8