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2019 MIPS Cost: Simple Pneumonia with Hospitalization Measure


This document details the methodology for the Simple Pneumonia with Hospitalization measure and should be reviewed along with the Simple Pneumonia with Hospitalization Measure Codes List file, which contains the medical codes used in constructing the measure.

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Measure Description

Episode-based cost measures represent the cost to Medicare for the items and services provided to a patient during an episode of care (“episode”). In all supplemental documentation, “cost” generally means the standardized Medicare allowed amount, which includes both Medicare and trust fund payments and any applicable beneficiary deductible and coinsurance amounts.1,2

The Simple Pneumonia with Hospitalization episode-based cost measure evaluates a clinician’s risk-adjusted cost to Medicare for beneficiaries who receive inpatient treatment for simple pneumonia during the performance period. The cost measure score is the clinician’s risk-adjusted cost for the episode group averaged across all episodes attributed to the clinician. This acute inpatient medical condition measure includes costs of services that are clinically related to the attributed clinician’s role in managing care during each episode from the clinical event that opens, or “triggers,” the episode through 30 days after the trigger.


Measure Rationale

Pneumonia is a leading infectious cause of hospitalization and death among adults in the United States, and community-acquired pneumonia (CAP), which is akin to the patient population in the Simple Pneumonia with Hospitalization measure, is a major driver of Medicare morbidity and mortality rates. The Simple Pneumonia with Hospitalization episode-based cost measure was recommended for development by an expert clinician committee—the Pulmonary Disease Management Clinical Subcommittee—because of its high impact in terms of patient population and Medicare spending, and the opportunity for incentivizing cost-effective, high-quality clinical care in this area. The Clinical Subcommittee provided extensive, detailed input on this measure.


Measure Numerator

The cost measure numerator is the sum of the ratio of observed to expected3 payment-standardized cost to Medicare for all Simple Pneumonia with Hospitalization episodes attributed to a clinician. This sum is then multiplied by the national average observed episode cost to generate a dollar figure.


Measure Denominator

The cost measure denominator is the total number of episodes from the Simple Pneumonia with Hospitalization episode group attributed to a clinician.


Data Sources

The Simple Pneumonia with Hospitalization cost measure uses the following data sources:

  • Medicare Parts A and B claims data from the Common Working File (CWF)
  • Enrollment Data Base (EDB)
  • Long Term Care Minimum Data Set (LTC MDS)


Care Settings

Methodologically, the Simple Pneumonia with Hospitalization cost measure can be triggered based on claims data from the following settings: inpatient (IP) hospitals.



The cohort for this cost measure consists of patients who are Medicare beneficiaries enrolled in Medicare fee-for-service and who receive inpatient treatment for simple pneumonia that triggers a Simple Pneumonia with Hospitalization episode.
The cohort for this cost measure is also further refined by the definition of the episode group and measure-specific exclusions (see Section 3.0).


1 - Claims data from Medicare Parts A and B are used to construct the episode-based cost measures.
2 - Claim payments are standardized to account for differences in Medicare payments for the same service(s) across Medicare providers. Payment standardized costs remove the effect of differences in Medicare payment among health care providers that are the result of differences in regional health care provider expenses measured by hospital wage indexes and geographic price cost indexes (GPCIs) or other payment adjustments such as those for teaching hospitals. For more information, please refer to the “CMS Price (Payment) Standardization - Basics" and “CMS Price (Payment) Standardization - Detailed Methods” documents posted on QualityNet: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic/P...
3 - Expected costs refer to costs predicted by the risk adjustment model. For more information on expected costs and risk adjustment, please refer to Section 3.5.


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