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    The Declaration of Independence famously quoted that “all men are created equal,” but for the newest patients arriving in U.S. maternity units, the costs are anything but equal.

    Take C-section deliveries, for example: Data on the range of service prices from the Health Care Cost Institute found that a C-section varies in cost between $3,000 in Knoxville, Tenn. and $40,000 in the San Francisco/Oakland metro area of California.

    With such divergent costs, patient behaviors are catching up, according to Aaron Cohen, JD, MPhil, co-leader of Citrin Cooperman’s Healthcare Practice. “I’m seeing employers actually flying employees to certain high-quality but lower-cost hospitals for certain procedures, because even with the cost of travel and housing, it’s very economically advantageous” to seek out those lower-cost care settings.

    Over time, practices’ actual costs will have an impact on reimbursement and should be a core component of proactive, data-driven conversations with payers, according to a 2020 Medical Practice Excellence Conference session presented by Cohen and Doral Jacobsen, MBA, FACMPE, MGMA consultant and founding partner, Prosper Beyond.

    Redefining cost: It’s about patients and payers, not one practice

    Of course, the meaning of total cost of care (TCoC) is best thought of as cost to payers rather than a practice’s actual internal cost to offer services, Cohen noted. “[TCoC] is truly from the eyes of the payers, not from the eyes of a provider — it’s their cost associated with their patients or with their beneficiaries,” Cohen said.

    In that view, TCoC includes the entire care continuum, not just the care provided at one practice. “It really encompasses not only the care received from that physician, but the follow-up care received by the patient that’s been seen, either for specialty care or ancillary services, surgical care, hospital stays, post-acute care — you name it,” Cohen added.

    Demystifying MIPS

    The cost category of the Merit-based Incentive Payment System (MIPS) has been a difficult area to master for many medical groups.

    “We have the poorest understanding of this category in particular for a lot of reasons,”

    Jacobsen said, since the Centers for Medicare & Medicaid Services (CMS) simply collects this data on the back end and assigns a score.

    “Moving the [cost of care] needle is a very difficult thing to do. … We don’t know what the benchmarks are ahead of time; they’re developed in parallel with scoring,” Jacobsen said. “The scores are also risk-adjusted and payment-standardized, and we don’t know what our score is until they’re poured out through the CMS QPP portal.”

    MIPS cost resource use measures and patient reporting requirements

    • Total per capita cost (TPCC) — 20 beneficiaries minimum
    • Medicare spend per beneficiary clinician (MSPB-C) — 35 minimum
    • 18 episode-based measures — 10 minimum for procedural episodes, 20 for acute inpatient medical conditions.

    * 10 points per measure averaged, graded on a curve. Hierarchical condition categories (HCCs) used for risk adjustment.


    One of the trickiest parts of MIPS cost is how beneficiaries are attributed to providers, Jacobsen said.

    • For TPCC, beneficiary attribution may be based on E/M services or visits with some included specialists — though CMS has excluded dozens of specialists from being measured on this (e.g., a dermatologist ought not be responsible for a beneficiary’s TCoC if they aren’t involved in addressing chronic conditions). “It’s really the plurality of care,” Jacobsen said — if more than one primary care provider (PCP) serves a beneficiary, the patient is attributed to the PCP who had the most E/M visits. The beneficiary is assigned at the Taxpayer Identification Number (TIN)/National Provider Identifier (NPI) level, and includes Medicare Parts A and B.
      To calculate the TPCC measure, total costs are divided by attributable beneficiary months within a one-year risk window. This allows for potentially two different clinicians to have attribution for TPCC depending on when E/M services are provided.
    • MSPB clinician attribution is based on when a provider gets at least 30% of E/M services or visits, or if they provided the main procedure during a “hospital stay,” which is defined as three days before and 30 days post-episode. It also includes Parts A and B claims.
      To calculate the MSPB measure, divide the sum costs for all episodes attributed by the total number of episodes attributed to the TIN/NPI (though CMS excludes some non-related services from cost during the stay).
    • Episodes attribution is largely procedure based (inpatient and outpatient) and has a “trigger service” that begins an episode of care (e.g., billing CPT code 66984 for cataract extraction). This varies from MSPB attribution in that there’s no pre- and post-hospital stay period, but rather an episode of care related to the type of procedure.
      Only 18 episodes are active through the QPP, but hundreds are being considered by CMS, including episodes of care for asthma, diabetes, dermatology issues and even mental health. A full list of those episode-based cost measures can be found via the QPP site at

    Finding data to support your cost strategy

    Once you have a sense for how beneficiaries are attributed for QPP cost measures, it becomes an exercise in finding the right data to understand how you are performing.

    Medicare data

    MIPS Feedback Reports (available via the QPP website at include a Feedback Overview (with a score summary for each MIPS category) and a Detail Report (with beneficiary-level details on HCC, chronic conditions and attributed costs by grouping). These spreadsheet files require an HCQIS Access Role and Profile (HARP) account to log into the portal, but they contain a wealth of information. The last Feedback Reports were released in summer 2019 for the 2018 performance period.

    Commercial payer data

    How to access relevant cost data from commercial payers varies:

    • For Cigna, there are cost and efficiency reports
    • For UnitedHealthcare, there are group assessment reports
    • Blue Cross Blue Shield plans have various provider profile reports.

    Though some of these reports can be found on payer websites, Jacobsen recommends connecting with your provider relations representative to get them on an annual basis.

    These reports are especially useful to pinpoint problems. For one retinal group Jacobsen worked with, the payer told the group that its costs were radically high compared to peer groups despite having solid results in the Transforming Clinical Practice Initiative (TCPI) through the CMS Innovation Center.

    Once meeting with that payer, Jacobsen and the group found that the payer was not comparing them to other subspecialists, which made the cost comparison look high despite good performance. “The implications for the group were that they were not in some of the narrow networks,” Jacobsen said, which set them on a strategy to get into those narrow networks and a better agreement with the payer.

    Transparency sites

    A growing collection of organizations are shining a light on claims information that can help medical groups understand TCoC, including:

    Other data sets

    • If participating in an ACO, ask leadership for clinician-level details.
    • Hospitals often can provide facility data for peer comparison, as well as data on average length of stay, infection rates and other measures.
    • Request profile peer comparisons from your state Medicaid program.
    • Workers’ compensation networks have peer comparison data.

    “Consumers and patients are using these more and more, and it behooves us to take a look and see what’s out there on our clinicians,” Jacobsen cautioned.

    Where is the waste?

    The Institute of Medicine’s oft-cited reports on wasteful healthcare spending in the United States point to less concern about overtreatment/low-value care and fraud/abuse and larger influence from factors such as administrative complexity, failure to coordinate care and (perhaps most important) pricing failures.1,2

    Managing cost

    Leveraging your MIPS feedback data

    Using the MIPS TCoC data, you can begin to evaluate the clinicians in your practice and spot variance from various perspectives (see Table 1).

    In the example Jacobsen provided, Dr. C has a 16% ED utilization rate. One way to address this would be for Dr. C’s medical assistants (MAs) to start asking for chronic conditions from patients as they are being roomed and encouraging those patients to connect with their PCP or establish a PCP to schedule a visit. That is just one example of a way to look at the data, “try to pick out the trends and be very creative” about potential solutions, Jacobsen said. “This data is going to point us into interventions that we can try to take better care of our communities.”

    Action steps

    Jacobsen recommended eight action steps that she finds successful practices use in approaching TCoC initiatives:

    1. Obtain and analyze TCoC data available and share with clinicians.
    2. Review the concepts around the American Board of Internal Medicine (ABIM) Foundation’s Choosing Wisely® recommendations for patient-physician conversations about the risks and benefits of different types of care.3
    3. Focus on strategies to reduce ED utilization and avoidable admission (via risk stratification/panel management).
    4. Review referral patterns in terms of cost and quality, and also identify opportunities for shifts. (This is particularly important for primary care practices).
    5. Increase focus on targeted preventive services.
    6. Improve transition-of-care coordination.
    7. Link quality measures with cost measures in the QPP — more payers are doing this in their contracts.
    8. Ensure that payer provider files in the Medicare Provider Enrollment, Chain, and Ownership System (PECOS) are up to date. If they are incorrect, you could be getting attribution for a physician no longer working in your group if he or she has not been unlinked from your organization.

    Further applications

    Cohen pointed to five major applications of these TCoC concepts once you have a handle on the data:

    1. Cost containment strategies: Once you understand your costs and have accounting for them, practice leaders can identify savings opportunities (e.g., purchasing, centralized services, staffing) that will increase profitability while working with payers to maintain or grow reimbursement. Ongoing reporting of data and use of dashboards, scorecards or benchmarks will help sustain those strategies.
    2. Evaluation of referral patterns: While there is additional burden in identifying and vetting low-cost, high-quality partners and educating patients about why you’re referring particular providers, you may be able to justify investments in care managers or technological solutions to aid in this effort.
    3. Physician compensation: As more of the practice’s total reimbursement is tied to cost of care, aligning physician incentives and compensation with those factors will be important. But the introduction of MIPS data enables groups to have data-driven compensation decisions and evaluate performance by each type of specialty.
    4. Payer contracting: More commercial payers are looking for medical groups that understand TCoC, especially as employers expect high-value networks for their sponsored health plans. Being a high-performing group in terms of cost and quality can also make it easier for your organization to contract directly with some employers. Better-performing groups will have more leverage with payers and the ability to get the most from alternative payment models (APMs) that your organization might pursue.
    5. Mergers and acquisitions (M&A) and strategic partnerships: As practices build out a referral management approach, providers can explore strategic deals to align strategies and combine models for long-term growth, if it fits the group owners’ vision. However, there are very specific legal requirements and guidance associated with some models, so always consult counsel to ensure arrangements are properly structured.

    Learn more

    Doral Jacobsen and other members of the MGMA Consulting team can help with managed care contracting and credentialing, alternative payment model initiatives, revenue cycle analysis and management, and federal payment program performance. Learn more:


    1. Berwick DM, Hackbarth AD. “Eliminating Waste in US Health Care.” JAMA. 2012;307(14):1513–1516. doi:10.1001/jama.2012.362.
    2. Shrank WH, Rogstad TL, Parekh N. “Waste in the US Health Care System: Estimated Costs and Potential for Savings.” JAMA. 2019;322(15):1501–1509. doi:10.1001/jama.2019.13978.
    3. ABIM Foundation. “Choosing Wisely®.”
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