This document details the methodology for the Total Per Capita Cost (TPCC) measure. The methodology should be reviewed along with the Measure Codes List file, which contains the medical codes used in constructing the measure.
The TPCC measures the overall cost of care delivered to a beneficiary with a focus on the primary care they receive from their provider(s). The measure is a payment-standardized, riskadjusted, and specialty-adjusted measure. The measure is attributed to clinicians, who are identified by their unique Taxpayer Identification Number and National Provider Identifier pair (TIN-NPI) and clinician groups, identified by their TIN number. The TPCC measure can be attributed at the TIN or TIN-NPI level. In all supplemental documentation, the term “cost” generally means the standardized1 Medicare allowed amount.2
The TPCC measure is an important means of measuring Medicare spending, as health expenditures continue to increase in the United States. Total health care spending is estimated to have increased by 4.6 percent in 2017, reaching $3.5 trillion.3 Spending for Medicare, which is still predominantly paid on a fee-for-service (FFS) basis, grew by 3.6 percent, reaching $672.1 billion. Spending on services for physicians and other health professionals totaled $69.9 billion and accounted for 15 percent of Medicare FFS spending in 2016.4 The TPCC measure specifically focuses on the importance of successful payment models for primary care management. Effective primary care management can support Medicare savings in a number of ways, including through improvements in the treatment of chronic conditions by obviating the need for high-cost hospital or emergency department services. More effective primary care management can also direct a greater proportion of patients to lower hospital costs for the inpatient services. Given the potential for decreasing spending through improvements in primary care delivery, the TPCC measure allows for a savings opportunity by capturing the broader healthcare costs influenced by primary care.
A TPCC measure was originally used in the Physician Value-Based Payment Modifier (VM) Program and reported in the annual Quality and Resource Use Reports (QRURs). With the introduction of the Quality Payment Program, a version of the TPCC measure was finalized with minor adaptations from VM and added to MIPS. The TPCC measure has undergone re-evaluation to address stakeholder feedback received from prior public comment periods and was finalized for 2020 MIPS performance period. 5
Beneficiary Exclusion Criteria
Beneficiaries are excluded from the measure population if they meet any of the following conditions:
- They were not enrolled in both Medicare Part A and Part B for every month during the measurement period, unless part year enrollment was the result of new enrollment or death.
- They were enrolled in a private Medicare health plan (e.g., a Medicare Advantage or a Medicare private FFS plan) for any month during the measurement period.
- They resided outside the United States or its territories during any month of the measurement period.
- They are covered by the Railroad Retirement Board.
The numerator for the measure is the sum of the risk-adjusted, payment-standardized, and specialty-adjusted Medicare Parts A and B costs across all beneficiary months attributed to a TIN or TIN-NPI during the measurement period.
The denominator for the measure is the number of beneficiary months attributed to a TIN or TIN-NPI during the measurement period.
The TPCC measure uses the following data sources:
- Medicare Parts A and B claims data from the Common Working File (CWF),
- Enrollment Data Base (EDB), • Common Medicare Environment (CME),
- Long Term Care Minimum Data Set (LTC MDS), and
- Provider Enrollment, Chain, and Ownership System (PECOS).
1 - 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 the Payment Standardization QualityNet webpage. (https://www.qualitynet.org/inpatient/measures/payment-standardization)
2 - Cost is defined by allowed amounts on Medicare claims data, which include both Medicare trust fund payments and any applicable beneficiary deductible and coinsurance amounts.
3 - “National Health Expenditure Projections, 2017-2026.” US Centers for Medicare & Medicaid Services, 2018.
4 - “Report to the Congress: Medicare Payment Policy.” MedPAC, 2018.
5 - Appendix B summarizes revisions to the TPCC Measure.