Exploring Episode-Based Approaches for Medicare Performance Measurement, Accountability and Payment Final Report. Types of Episode Constructions that Have Been Proposed for Use


(1) Services Related to a Hospitalization.  Several proposals in the literature have focused on constructing episodes of care related to a hospitalization.  In many approaches in the literature, the episode would include related care provided during a post-discharge time period, potentially including post-acute institutional, home health care, and follow-up medical and therapy services.  The earlier proposals, starting before the implementation of IPPS, focused on payment only.  More recently, the proposals have also included a focus on performance measurement.

(2) Preventive Care or Primary Care Episodes. Several recent articles included proposals to create episodes of care covering preventive care or primary care only, excluding specialty care, hospital care, ancillaries, etc., with the episode capturing up to a year of time (Goroll et al., 2007; Network for Regional Healthcare Improvement, 2007; Pham and Ginsburg, 2007) .  To qualify for the payment, providers may be required to demonstrate that they meet criteria for an “advanced medical home.”

(3) Chronic Care Episodes.  Several articles proposed bundling together services related to the management of chronic conditions, including services provided by the physician managing the condition and possibly diagnostic tests, with general primary care physician services, specialists, hospital care, long-term care, etc. paid separately (Berenson, 2007; Davis and Guterman, 2007; Network for Regional Healthcare Improvement, 2007) .  An existing example is the Medicare payment of physicians for management of end-stage renal disease (ESRD) (Leavitt, 2008).

(4) Broader Definitions of Episodes. Several articles have proposed using broader definitions of episodes of care to bundle together all services related to a particular condition for the purposes of performance measurement and/or payment (U. S. Office of Technology Assessment, 1986; Davis and Guterman, 2007; Pham and Ginsburg, 2007) .  Two proprietary episode “grouper” software programs, the Symmetry Episode Treatment Groups (ETGs) and the Thomson-Medstat Medical Episode Groups (MEGs), bundle claims into episodes based on procedure and/or diagnosis codes. However, a recent review found little published literature on the clinical validity of the groupers (McGlynn et al., 2008).  CMS has funded a study to study the clinical validity but the study is still ongoing.  Current applications using a broader episode definition have focused on profiling physicians on their relative resource use applying the commercially available grouper tools. 

(5) Prometheus Payment Model Approach.  The Prometheus Payment program, which has been conceptualized but not yet tested, proposes to base payment and performance measurement on episodes defined using diagnoses and clinical practice guidelines for appropriate services.  The program proposes to develop an evidence-informed case rate (ECR), which would be a single, risk-adjusted, prospective (or retrospective) payment given to providers across inpatient and outpatient settings to care for a patient diagnosed with a specific condition—in effect the defined “episode” under this model.  Payment amounts would be based on the resources required to provide care as recommended in well-accepted clinical guidelines.  This model calls for a portion of the payment to be withheld and re-distributed based on provider performance on measures of clinical process, outcomes of care, and patient experience with care received (de Brantes and Camillus, 2007). 

We discussed with the experts their views on the pros and cons of different episode definitions.  Most experts professed a strong preference for episodes that cut across multiple settings because of the incentives created for care coordination.  A particular concern flagged by many experts was how to approach complex patients with multiple chronic conditions, who represent a high proportion of Medicare costs.  Many experts doubted whether episodes focusing on each disease separately were appropriate for these patients, who may be better managed using a more holistic approach. Alternative approaches for handling complex patients with multiple conditions included medical homes or other arrangements, in which an organization accepted accountability for performance and a care coordination payment, capitation payment, or other payment for management of multiple conditions.

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