Exploring Episode-Based Approaches for Medicare Performance Measurement, Accountability and Payment Final Report. 1. Medicare beneficiaries have a large number of different episodes types per year.


The Medicare beneficiaries for the nine conditions we examined had an average of 10 episodes during the year, and the majority of episodes were unrelated to the condition that was used as a criterion for inclusion of the beneficiary in this study.  Most episodes were of varying types (i.e. not repeated occurrence of the same type of episode).  Many of the other unrelated episode types were common among beneficiaries across the nine study conditions, such as fungal skin infections, hypertension, COPD.

From a performance measurement and payment perspective, the large number of episodes per beneficiary--some of which might benefit from coordinated management--raises questions about the degree to which care for a particular beneficiary should be examined holistically, or alternatively, split into small units of analysis such as within specific types of episodes.  How one defines an episode of care represent a point on a continuum of different levels of aggregation of services, ranging from the sum of all services provided to a beneficiary per year (such as a per-capita approach) to each of the separate services that are used as a basis for current FFS payments.  However, there is a large middle ground, in terms of the ways in which services could potentially be grouped to better align care delivery and incentives for providing the right care, between these two extremes. - In considering the specific application of the episode it is important to conditioner:  1) What is the optimal way to define an episode? and 2) How much aggregation of services does the episode construction entail?

In general, a broader episode definition lends itself to a more holistic view of patient care, while narrower definitions provide more of a condition-specific (or, with an even narrower definition, a treatment- or service-specific) perspective on care.  Broader episode definitions will include more variability in the service content of the episode and a greater number of providers involved in care, creating greater complexities for performance measurement and structuring payments.  For example, the inclusion of more services that touch more providers across more settings of care presents challenges for assigning accountability to a single provider or multiple providers who may or may not feel "ownership" of management of the episode depending on their level of involvement.  Depending on the amount of variability in the content of the services provided within an episode construct, this could increase the financial risk to providers in the context of a bundled payment if the variation is large.  

Ultimately, the specific application should drive the construction of the episode and it is possible that that episode definitions may need to vary depending on the application. For quality measurement, the episodes that were generated from the commercial grouper tools within the context of this study may be too narrow to optimize patient management for some conditions. Many conditions are interrelated and so is their management-such as the case for management of ischemic heart disease, hypertension, hyperlipidemia, and diabetes; in such cases, quality measurement approaches using a broad episode definition encompassing a cluster of related conditions may be more appropriate than measures for tranches of care related to each condition separately. Additional work is required to better articulate what types of episodes are clustered together and represented related conditions, and to assess the implications for coordinated patient management among the array of providers involved in a beneficiary's care. Existing performance measures focus on discrete services within single conditions, and little work has been done to define how to optimize the management of patients with co-occurring conditions and to develop associated integrated performance measures

In contrast, the episode definitions used in this study may be too broad for some payment applications.  The substantial variation in standardized payments for some episode types that we observed when applying the ETG and MEG grouper tools suggests that the type of care being delivered within some types of episodes may be heterogeneous and reflect care for different types of patients.  Providers may be placed at financial risk when variations are due to underlying differences in the severity or types of cases being managed.  Additional work to understand the extent to which the episodes within a given condition reflect similar patient populations would help determine whether the variation is a function of differences in patients vs. care management practices.  To the extent that the variations are due to variations in practice patterns for an otherwise homogeneous group of patients, dampening down on the variation through a "bundled" payment may be appropriate while not exposing providers to undue risk.  

The episode constructions within the ETGs and MEGs are fairly broad and include all providers and settings, but they were not developed for the purpose of quality measurement or payment applications. 32  Use of off-the shelf grouper tools was done for convenience to illustrate some of the types of issues that would need to be considered if episode-based approaches were applied.  Narrower episode definitions could be constructed either by using different algorithms, further limiting the services that were considered to be part of a single episode, or by considering only certain providers or settings within the ETG and MEG episode groupings; additionally, broader definitions, including per-capita analyses, could be considered.  In our discussions with experts, they noted that more-narrowly defined episodes, such as those encompassing a single setting (e.g., hospital inpatient) were the most feasible and a good starting point; however, to achieve substantial benefits, multiple settings would have to be grouped together in the episode (e.g., hospital, ambulatory, post-acute care), and doing so would strengthen incentives for care coordination.  

It is unclear whether physicians and other providers would view a beneficiary's multiple episodes as defined in this study as distinct issues to be managed separately or as related issues to be managed jointly. If providers viewed certain episodes as related issues that should be managed jointly (e.g., episodes of ischemic heart disease, hypertension, and hyperlipidemia), then it may be appropriate to expand episode definitions under some approaches to group related conditions. One possibility would be to create bundles of episodes that commonly co-occur and which would benefit from a more integrated management approach.

It is also unclear whether the same provider would be attributed primary responsibility for multiple different types of episodes.  Our analysis did not assess whether the same or different providers were involved in managing the different types of episodes for a single Medicare beneficiary, and future analyses could examine how many unique providers are involved in managing all the various episodes for a single Medicare beneficiary. It is possible that several related episodes for a patient could be attributed to different providers - for example, a patient with an AMI could have had an ischemic heart disease episode attributed to a cardiologist, a hypertension episode attributed to a primary care physician, and a diabetes episode attributed to an endocrinologist.  Future research could test the extent to which different episodes for a single beneficiary are attributed to one or multiple providers using common attribution rules, and whether these assignments match the perceptions of the physicians involved in delivering the care as to who is responsible for managing which aspects of care and whether there should be joint management and accountability (absent explicit organizational relationships such as in integrated provider organizations).

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