Aligned incentives through Episodes of Care

May 17, 2021 / By Rick Kresinske

Ever heard a primary care physician (PCP) in a value-based payment (VBP) contract say they shouldn’t be responsible for a patient they’ve never seen? Have your non-PCP, specialty providers (specialists) lobbied for a VBP model in which they can be included? Are your cost containment efforts limited to internal care management, unit price reductions, tightening of service authorization requirements or PCP-based intervention? If you answered “yes” to any of these questions, Episodes of Care (EOC) are a great solution.

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EOC are an alternative payment method to cover health care costs for the care a patient receives within a specified timeframe for a specific medical condition, such as asthma or diabetes (Cohort episode), or high acuity encounter such as a hospitalization (Event episode). While Event episodes are generally for a narrow window before and after a high acuity encounter, Cohort episodes can span a calendar year.

For the first and second questions above, EOC solve both at the same time. Take for example a diabetic patient who tells their health plan they want Dr. Jones to be their PCP, but only receives medical treatment from their endocrinologist, Dr. Smith. Traditional PCP-centric VBP models would hold Dr. Jones (PCP) accountable for the patient’s health outcomes, whereas a diabetes Cohort EOC model can place the accountability on Dr. Smith (endocrinologist). EOC VBP models help solve the common problem of physician attribution, as well as allowing outcome-driving specialists who have historically been left out of VBP arrangements (especially behavioral health providers) to participate. The result is an aligned incentive model where physicians of all specialties can receive financial reward for improving the health outcomes of their patients, driving value in the health care system.

What about  the third question concerning cost containment efforts, and whether they are limited to internal care management, unit price reductions, tightening of service authorization requirements or PCP-based intervention? Both Event and Cohort EOC can be useful tools for cost containment. The traditional approach for provider specific cost containment efforts has been to reduce the price a payer reimburses the provider for a service. Not nearly as much attention is focused on referral patterns of the specialist or post procedure treatment, even though a Medicare study found that, for 10 common Medicare 90-day episodes triggered by inpatient stays, Medicare spent nearly the same amount for post-acute care as for the inpatient stay itself. This leaves an opportunity to reduce unnecessary spend through provider awareness and better care coordination. EOC analysis gives insight into Episode Event medical costs before, during and after a triggering Event, how they differ by providers who render the Event, category of service breakdown of where the post-acute care is being rendered, and quality indicators such as Potentially Preventable Events… all risk adjusted of course based upon the patient’s clinical makeup.

View our webinar on Episodes of Care, where we’ll discuss Episodes of Care in more detail along with use cases and detailed examples.

Rick Kresinske is a client engagement and strategy executive at 3M Health Information Systems.