2022 MIPS Cost: Diabetes Measure


This document details the methodology for the Diabetes measure. It is part of a set of documents that together contain the measure specifications:

  • Cost Measure Methodology document (this document);
  • Cost Measure Methodology Appendices document, which contains additional details on the measure construction framework; and
  • Measure Codes List file, which contains the medical codes used in the measure.

Detailed PDF Download Appendices PDF Download


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, the term “cost” generally means the standardized1 Medicare allowed amount,2 and claims data from Medicare Parts A, B, and D3 are used to construct this episode-based cost measure.

The Diabetes episode-based cost measure evaluates a clinician’s or clinician group’s riskadjusted cost to Medicare for patients receiving medical care to manage and treat diabetes. This chronic condition measure includes the costs of services that are clinically related to the attributed clinician’s role in managing care during a Diabetes episode.


Measure Rationale

The high prevalence and cost of diabetes mellitus and its associated complications to the United States health care system warrants the exploration of potential cost measures which aim to achieve more cost-effective care for this chronic condition. In the United States, there are approximately 13.5 million people ages 65 and older living with diabetes, and treatment of diabetes in the United States costs over $348 billion annually.4 In 2012, 59% of healthcare costs related to diabetes were associated with patients over the age of 65.5 In 2017, approximately 57% ($9,600 out of $16,750) of annual medical expenditures incurred for patients diagnosed with diabetes were related to their diabetes diagnosis.6 Additionally, on average, patients with diabetes had medical expenditures 2.3 times higher than those for patients without a diabetes diagnosis.7

Significant cost drivers in the care of diabetes are the occurrence of acute complications such as acute hyperglycemic crises (diabetic ketoacidosis and hyperglycemic hyperosmolar nonketotic syndrome) and longer-term complications of diabetes such as retinopathy, neuropathy, diabetic foot ulcers, cardiovascular events, and amputations.8 For example, over $2.4 billion in costs from hospital treatment were attributed to acute hyperglycemic crises, and over $1.84 billion for acute hypoglycemia and related injuries.9,10 Overall, patients with multiple diabetes complications had a higher risk of readmissions for severe dysglycemia (hyperglycemia or hypoglycemia) as well as causes that are unrelated to diabetes. It was also estimated that the prevalence of diabetic retinopathy among diabetic patients 65 years and older was 29.5%.11 Similarly, in 2007, 8.1% of Medicare beneficiaries with diabetes enrolled in Medicare Parts A and B had diabetic foot ulcers, incurring spending that was significantly higher than that for beneficiaries without chronic wounds ($31,363 vs. $11,692, respectively).12 Given the prevalence of diabetes in the Medicare population, and the high costs associated with the management of the disease and its complications, the Diabetes cost measure represents an opportunity for improvement on overall cost performance.

The Diabetes episode-based cost measure was recommended for development by an expert clinician committee—the Chronic Condition and Disease Management Clinical Subcommittee— because of its high impact in terms of patient population, clinician coverage, and Medicare spending, and the opportunity to build a complex, yet feasible, chronic condition measure that would address a condition not captured by other cost measures. Based on the initial recommendations from the Clinical Subcommittee, the subsequent Diabetes Clinician Expert Workgroup provided extensive, detailed input on this measure.


Measure Numerator

The measure numerator is the weighted average ratio of the winsorized13 annualized standardized observed cost to the annualized expected14 cost for all Diabetes episodes attributed to a clinician, where each ratio is weighted by each episode’s number of days assigned to a clinician. This sum is then multiplied by the national average winsorized annualized observed episode cost to generate a dollar figure.


Measure Denominator

The measure denominator is the total number of days from Diabetes episodes assigned to the clinician across all patients.


Data Sources

The Diabetes measure uses the following data sources:

  • Medicare Parts A, B, and D claims data from the Common Working File (CWF),
  • Enrollment Database (EDB), and
  • Long Term Care Minimum Data Set (LTC MDS). 15


Care Settings

The Diabetes measure focuses on the care provided by clinicians practicing in non-inpatient hospital settings for patients with diabetes. The most frequent settings in which a Diabetes episode is triggered include: Office, Skilled Nursing Facility (SNF), and Outpatient Hospital.



The cohort for this cost measure consists of patients who are Medicare beneficiaries enrolled in Medicare fee-for-service that receive care for type 1 or type 2 diabetes.

The cohort for this cost measure is also further refined by the definition of the episode group and measure-specific exclusions (refer to Section 4).



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 or other payment adjustments such as those for teaching hospitals. For more information, please refer to the “CMS Part A and Part B Price (Payment) Standardization - Basics" and “CMS Part A and Part B Price (Payment) Standardization - Detailed Methods” documents posted on the CMS Price (Payment) Standardization Overview page (https://www.resdac.org/articles/cms-price-payment-standardizationoverview). Claim payments from Part D are payment standardized to allow resource use comparisons for providers who prescribe the same drug, even if the drug products are covered under varying Part D plans, produced by different manufacturers, or dispensed by separate pharmacies. For more information, please refer to the “CMS Part D Price (Payment) Standardization” document posted on the CMS Price (Payment) Standardization Overview page. (https://www.resdac.org/articles/cms-price-payment-standardizationoverview).
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 Part D branded drug costs are also adjusted to account for post-point of sale drug rebates; more information can be found in the Methodology for Rebates in Part D Standardized Amounts on the MACRA Feedback Page (https://www.cms.gov/Medicare/Quality-Payment-Program/Quality-PaymentProgram/Give-Feedback).
4 International Diabetes Federation, "IDF Diabetes Atlas - 8th Edition," https://www.diabetesatlas.org/upload/resources/previous/files/8/IDF_DA_8e-EN-final.pdf.
5 Mousumi Sircar, Ashmeet Bhatia, and Medha Munshi, "Review of Hypoglycemia in the Older Adult: Clinical Implications and Management," Canadian Journal of Diabetes 40, no. 1 (February 2016): 66-72, https://doi.org/10.1016/j.jcjd.2015.10.004.
6 American Diabetes Association, “Economic Costs of Diabetes in the U.S. in 2017,” Diabetes Care 41, no. 5 (May 2018): 917–928, https://doi.org/10.2337/dci18-0007.
7 American Diabetes Association, “The Cost of Diabetes,” https://www.diabetes.org/resources/statistics/cost-diabetes.
8 Baxter et al., "Estimating the Impact of Better Management of Glycaemic Control in Adults with Type 1 and Type 2 Diabetes on the Number of Clinical Complications and the Associated Financial Benefit," Diabetic Medicine 33, no. 11 (January 2016): 1575-1581, https://doi.org/10.1111/dme.13062.
9 Guillermo Umpierrez and Mary Korytkowski, "Diabetic Emergencies — Ketoacidosis, Hyperglycaemic Hyperosmolar State and Hypoglycaemia," Nature Reviews Endocrinology 12 (February 2016): 222-232, https://doi.org/10.1038/nrendo.2016.15.
10 Zhao et al., "Economic Burden of Hypoglycemia: Utilization of Emergency Department and Outpatient Services in the United States (2005–2009)," Journal of Medical Economics 19, no. 9 (April 2016): 852- 857, https://doi.org/10.1080/13696998.2016.1178126.
11 Zhang et al., “Prevalence of Diabetic Retinopathy in the United States, 2005-2008,” JAMA 304, no. 6 (August 2010): 649–656, https://doi.org/10.1001/jama.2010.1111.
12 Michael Sargen, Ole Hoffstad, and David Margolis, “Geographic Variation in Medicare Spending and Mortality for Diabetic Patients with Foot Ulcers and Amputations.” Journal of Diabetes and its Complications 27, no. 2 (March-April 2013):128-133, https://doi.org/10.1016/j.jdiacomp.2012.09.003.
13 For information on how costs are winsorized, please refer to Section 4.7.
14 Expected costs refer to costs predicted by the risk adjustment model. For more information on expected costs and risk adjustment, please refer to Section 4.7.
15 For information on how LTC MDS data are used in risk adjustment, please refer to Section 4.5

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