Medicare Spending per Beneficiary

The Medicare Spending per Beneficiary (MSPB) measure captures what Medicare Part A and Part B pay for services delivered during a defined episode of care that extends from three days before a patient's hospital admission through 30 days after discharge. It is a comprehensive view of the cost of a hospitalization — including not just the inpatient stay but the full downstream care that follows.

MSPB is explicitly designed as an efficiency measure, not a quality measure. A lower score is not automatically better — a hospital that discharges patients too quickly to reduce costs, only to see them readmitted, would have poor performance on readmission measures. MSPB is intended to be interpreted alongside quality outcomes, not as a standalone signal.

Payments are price-standardized to remove geographic variation in labor and input costs, and risk-adjusted for patient characteristics. The resulting score is a ratio: observed episode spending divided by expected episode spending for a hospital with the same patient mix.

The MSPB episode is broader than just the inpatient stay. It begins three days before admission — capturing pre-admission workup and testing — and extends 30 days after discharge, capturing all post-acute care, physician visits, lab work, home health, and other services that follow the hospitalization.