The Michigan Value Collaborative

Helping Michigan hospitals achieve their best possible patient outcomes at the lowest reasonable cost


Unpacking Medicare’s MACRA Resource Use measure

Paige VonAchen

Paige is a MVC Research Intern and MD/PhD candidate at the University of Michigan Medical School

The Medicare Access and CHIP Reauthorization ACT (MACRA) Merit-based Incentive Payment System (MIPS) will begin payment adjustments beginning 2019, resulting in approximately $199 million in payment adjustments and $500 million in additional bonuses across physicians nationally each year. The program scores physicians based on their performance in four areas: quality, improvement activities, advancing care information and resource use. While the Resource Use category comprises 0% of the overall weighting in 2019 (based on performance year 2017), the weighting will rise to 10% in 2020 (based on performance year 2018), and then to 30% beginning 2021. Therefore, understanding how the new measure is determined and adapting accordingly will be critical to providers’ success under the new payment system.

So, what does Resource Use really mean? And how is it calculated?

First, let’s establish who is not being scored…clinicians participating in the Advanced Alternative Payment Models (AAPM) and clinicians that are non-patient-facing (e.g., pathologists and radiologists) will also not be scored (instead, the weights of the other categories will increase).

For those that are being scored, it’s important to know the three measures that comprise the Resource Use category:

  • Total per capita costs: this measure represents the total yearly costs (for Parts A and B) for all patients assigned to a physician, divided by the total number of patients assigned to that physician. Patients are attributed to the physician or physician group that delivers the plurality of “primary care services” (under Part B) to the beneficiary as compared to any other practice, and includes admissions due to COPD, CHF, CAD, and Diabetes Mellitus.
  • Medicare Spend per Beneficiary (MSPB): this is a measure of combined Part A and B spend incurred around a hospitalization beginning 3 days prior to admission through 30 days post-discharge. MSPB is attributed to the provider submitting the majority of Part B claims during the index hospitalization. The total cost of care for such an episode is attributed to the physician or physician group that spends the most time with the patient during the initial admission.
  • Condition- and Episode-Based Measures: this measure looks at episodes of care triggered by a specific diagnosis of procedure. Many episodes are surgical (e.g., hip or knee replacement); however, there are medical as well (e.g., CHF, and COPD exacerbation). Any physician that provides over 30% of inpatient E&M codes during the index event (inpatient stay) will have the Part A & B costs of that episode attributed to them. This is currently reported in today’s Quality and Resource Use Report (QRUR); however, now it impacts reimbursement.

Needless to say, the Resource Use category of MACRA is complex and the implications for individual physicians depend on their type of practice and compilation of patients. Understanding and monitoring the payment and utilization of your own services will help you identify the most efficient services and allow you to adapt to MACRA’s new payment system.

Read more about MACRA at:


10 key questions to ask about any new bundled payment program

Jim Dupree

Jim Dupree, MD, MPH, is Co-Director of MVC and Assistant Professor of Urology at University of Michigan.

Bundled payments seem to be everywhere these days.  For episodic care, like surgeries or acute medical conditions, bundled payments attempt to improve quality and decrease costs for the duration of the care window. Bundled payments are meant to align incentives between all of the various providers who care for a patient during the episode.

Bundled payments have been used by the Centers for Medicare & Medicaid Services (CMS) for many years through their voluntary Bundled Payments for Care Improvement initiative.  Most recently, CMS enacted its first mandatory bundled payment program, the Comprehensive Care for Joint Replacement.  Bundled payments are also found in the private insurance market and even outside the insurance market all together.  Some large employers are now contracting directly with hospitals to provide bundles of surgical care for their employees.  And we can expect to see bundled payment programs flourish after passage of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, which incentivizes physicians to participate in alternative payment models like bundled payments. 

But, not all bundled payment programs are the same; each bundle will have different structure and rules.  Here are 10 key questions you should ask about each new program:

  1. What is the target condition, and how is it defined? What are the inclusion and exclusion criteria for patients to qualify for the bundle?
  2. For bundles based on hospitalizations, are pre-admission services included in the bundle?
  3. What is the time window for the bundle? Most bundles attempt to capture care for 30 to 90 days after discharge.
  4. How is patient choice accommodated in the bundle?
  5. What are the bundle’s quality measures? How do those quality measures help ensure that important, needed care is not withheld from patients?
  6. Are all services and types of care within the time window attributed to the bundle? If not, how is it determined which services are and are not attributed to the bundle?
  7. What type of risk adjustment is used in the calculation of episode costs?
  8. Does the target bundled price incorporate regional variation, teaching status, or other structural characteristics of your hospital?
  9. How much variation do you think exists for that services?
  10. What are your current episode costs for that condition, and how do you compare to your peers?

All of this data is available for MVC member hospitals to help them understand their local care episodes. For additional reading, Health Affairs recently released an excellent summary about designing bundled payment initiatives.

Questions or comments?  We’d love to hear from you.  You can comment on this article, or use the form at the bottom of this page.