Tuesday, May 31, 2011

Iterative metrics and Medicare Spending per Beneficiary

Today's New York Times carries a front-page article describing Medicare's proposal to include a period 3 days before a patient hospitalization and 90 days after to calculate a "Medicare Spending per Beneficiary Episode" to be included in payment calculations. You can read the original Federal Register notice here (76 FR 25788; it was posted May 5). The relevant section begins about 109 pages in. In effect, Medicare will now hold hospitals accountable for coordinating related care and services for 90 days after a hospitalization.

Representatives of some hospital associations are complaining that hospitals will lose track of patients two to three months after an episode, and others say that the proposed rules will be hard on hospitals that serve many low-income patients. These are typical comments providers make when a new metric is announced. (The Times also reports that some hospitals are saying, in effect, "Bring it on!")

If I were working in a hospital, or thinking about applying a similar methodology to my operations, I would recommend remembering two key points about methodology.

First, the baseline may not be correct. Funders or others looking at results like this need to be flexible enough to change the baseline, if the baseline appears to be set at the wrong level.

Second, once the baseline is established correctly and the metric has worked for a few years, hospitals will respond to it and, in all likelihood, a new baseline will have to be calculated.

It will be interesting to see how the comments period plays out and how this rule is eventually established. For now it's a good illustration of how important each iteration of a metric can be.

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