Analysis of medicare spending per beneficiary (MSPB)

Nicholas Bowers, Jared Cirelli, Alyssa Andrzejewski, Joseph Lang, Faisal Aqlan, Anne Pedersen

Research output: Contribution to journalConference articlepeer-review


Medicare Spending per Beneficiary (MSPB) measures a hospital efficiency, based on the Medicare payments made during an episode or stay. An episode is comprised of three days before, during, and 30 days following the patient's stay in the hospital. An MSPB episode includes all claims made from the prior three days of the inpatient stay to the post 30 days following the stay. The MSPB index is the ratio of the hospital's payment-standardized risk-adjusted MSPB amount to the episode-weighted median across all hospitals. The Medicare payments are revised and adjusted to decrease and remove any variation that is not related to the care. In this paper, we analyze MSPB in a local hospital and use process improvement tools to reduce the Medicare cost and improve hospital efficiency. The study investigates the root causes of the high MSPB index and propose actions to reduce it from 1.03 to below 1.00, the current state average. Root cause analysis was performed to identify the factors that directly affect the costs. It was found that a significant contributor of the high Medicare costs, and hence high MSPB index, is the readmission of patients to the hospital within seven days of discharge. Solutions were proposed to reduce the readmissions and reduce the MSPB Index to below 1.00.

Original languageEnglish (US)
Pages (from-to)1171-1179
Number of pages9
JournalProceedings of the International Conference on Industrial Engineering and Operations Management
Issue numberSEP
StatePublished - Jan 1 2018
Event3rd North American IEOM Conference. IEOM 2018 -
Duration: Sep 27 2018Sep 29 2018

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Control and Systems Engineering
  • Industrial and Manufacturing Engineering


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