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August 1, 2018

Understanding and Analyzing Episodes of Care (EoC)

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Episodes of Care begin with a healthcare “event,” such as a knee replacement surgery, and extend throughout a window of time when a patient receives healthcare services following that event.

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How are episodes of care data used?

EoC data are relevant for developing and updating healthcare payment policies such as:

  • Bundled payments
  • MACRA – Medicare Access and CHIP Reauthorization Act
  • MIPS – Merit-based Incentive Payment System
  • APMs – Alternative Payment Models

Takeaways from our research on surgical EOC 

  1. Large payment variations exist in Medicare payments for EoC. Medicare payments can vary 40–60% for the same surgery.
  2. Payment variation is predominantly driven by five factors:
    1. Procedure(s) performed
    2. Complications
    3. Patient complexity
    4. Post acute care use
    5. Readmissions
  3. Drivers of payment variation differ across hospitals. Hospitals need access to comprehensive data on their own EoCs to address variations.
  4. Patient complexity causes differences in bonuses and penalties that hospitals may receive. Patient complexity includes factors like age, health conditions, or socioeconomic status. 

 

What does all of this mean for policy discussions?

As the Centers for Medicare & Medicaid Services (CMS) continues to pursue payment reform around episodes of care, several factors should be considered:

  • These programs should incorporate risk adjustment to account for hospitals that care for complex patients.
  • CMS should provide all hospitals access to EoC data so they can evaluate ways to improve care and decrease unnecessary costs.
  • For each clinical condition in an EoC, CMS should tailor the payment incentives to the specific sources of variation in that condition.
  • CMS should continually evaluate payment variation and rebalance incentives/payments when needed. 

For more information, please contact Eileen Kostanecki, IHPI’s Director of Policy Engagement & External Relations, at [email protected] or 202-554-0578.

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