Four key reasons why episodes of care will work this time

The concept of defining specific episodes of care for the purposes of measuring quality and efficiency of care has been around for a long time. EOCs define the scope of care and qualification for specific treatable conditions, which is challenging considering the potential complexities of each procedure and condition. EOCs are essential to enabling effective value-based payment models and effective population health programs, but the industry has struggled for years to make standard EOCs part of healthcare.

The seminal work in EOCs was done by Jerry Solon and his colleagues in the 1960s, outlined in an article titled Delineating Episodes of Medical Care. Since then, numerous attempts have been made to implement EOC. For example, in 1996 I led a team at Oxford Specialty Management, a subsidiary of Oxford Health Plans, in the development of an Episodes Engine, a set of systems, procedures and contracting methods to track clinical conditions and the EOC, their costs and outcomes. Finally, the regulatory, technical and cultural forces seem to be aligning to make implementation of EOC a reality.

Today, providers and payers alike are evolving the way they deliver and track care to adapt to the changing waters of value based care, largely driven by the Affordable Care Act. Centers for Medicare & Medicaid Services is already testing episode-based reimbursement models, for example, the comprehensive care for joint replacement. As usual, private payers are taking cues from the government's model, and are exploring their own bundled payment initiatives based on EOCs.

Bundled payments are one avenue public and private payers are taking to make value based care models work, and well defined EOCs are imperative to that process as they serve to define what procedures fit within each pay structure. With significant progress being made in the healthcare industry to support EOCs, the model now stands a better chance of success today and into the future for four key reasons.

1. Regulatory support
As part of the Affordable Care Act, incentives have started to shift from fee-for-service to value-based reimbursement models that adhere to standards of care with measurable outcomes. This transition is putting pressure on each industry stakeholder to be accountable for improved health experiences, outcomes and cost reductions.

Other regulatory initiatives have also helped to establish the infrastructure that will allow EOCs to be successful today. Supports such as the Health Information Technology for Economic and Clinical Health Act and the resulting Meaningful Use program drove high adoption of electronic medical records to a large extent. The long awaited adoption of ICD-10 also promises to play a significant role in creating the environment, making it more practical to design and implement EOCs based on significantly increased diagnostic specificity.

2. Population health
Population health not only demands changes in how providers and payers define care, but also in the way care is delivered, as it shapes the way organizations determine optimal care for each condition, each group and each individual. To successfully conduct the comparative analytics required to fulfill the promise of population health, organizations need accurate, normalized data, and EOCs play a critical role in creating that data.

Insights garnered from population health analytics help providers and payers fine-tune answers to larger scale questions around common acute care and chronic conditions. An organization with a successful population health program has the ability to analyze how different cadres respond to treatment and can answer questions such as:
• How are the outcomes differing for different groups? In what timeframe?
• What is the cost per episode and what factors impact that cost?
• What external factors may be affecting patient health?
• How many encounters should an episode include?
• Under what circumstances should that number be higher/lower?

Without the standard definitions of EOCs, it is impossible to get clear answers to these questions.

All of this means that EOCs are imperative for successful population health, but the reverse is true as well – population health analytics will drive increasing proliferation and refinement of EOC definitions. Thanks to the data gathered in population health initiatives, we are able to do apples to apples comparisons of the same constellation of treatment, drugs, or surgeries on each cadre to better understand the impact of care and to optimize the use of EOCs. Interestingly, the impact of EOCs in population health will extend to device and life science organizations, and provide better direction for those entities to collaborate around achieving the best outcomes for the lowest cost. Life science and device companies will be much better able to demonstrate their ability to reduce cost and improve outcomes in the context of well-defined EOCs.

3. Collaboration and trust among key players
In today's ACA environment, conversations around payment reform are more prevalent than ever, and payers are actively working to share risk and administrative burden with providers. As payment reform takes shape industry-wide, collaboration between providers and payers will increase, and their worlds become more intertwined to the benefit of patient populations.

The relationship between payers, providers and patients has long been mired in complexity and mistrust. However, value based models work to refocus stakeholders on doing the right thing, the right way, and improving health outcomes for the benefit of all parties. Outcomes oriented evaluation of value based care helps break down the historic tension between payers and providers around appropriate utilization, altering the political and financial incentives, and allowing these entities to work toward shared goals.

Proper utilization of EOCs will take committed collaboration and leadership to push the vision through layers of bureaucracy within and across organizations. Theoretically, in a value based care payment model, there is much greater alignment among payers, providers, health systems, physicians, and patients, because they are all invested in achieving successful patient outcomes at lower costs. To do this, they need accurate, comprehensive data – supported by clear EOC definitions – to have a single version of the truth everyone can agree on.

4. Technology
Improving collaboration among payers and providers means opening the door to take advantage of new technology and easier integration. Today's sophistication and adoption levels of healthcare IT have come a long way since the early days of EOC models.

In the very recent past (and for many organizations, still today) it was extremely difficult and resource consuming not only to access and integrate data from partner organizations, but even from disparate systems within the same health system. With broad adoption of EMRs and interoperability standards like Fast Healthcare Interoperability Resources and ONC's Nationwide Health Information Network, these will be much more manageable feats.

Using analytical tools, including predictive modelling, stakeholders can better evaluate risk and more effectively measure and improve their clinical processes before entering into a value based contract. Predictive analytics platforms available from companies like GNS Healthcare are pushing the boundaries of population health analytics even further, by crunching data to help tailor specific treatments for individual patient to increase treatment efficacy and further bend the risk curve.

One of the biggest obstacles historically to implementing effective EOCs is that payers and providers have been unable to effectively share data. Health information exchanges and other mechanisms have helped to break down those barriers, making more fluid information sharing increasingly common. This data integration is a key strategic element because payers and providers need each other's data to build effective EOC definitions and risk profiles.

Thanks to these four factors, EOCs are on track to become a permanent and vital component of success in all aspects of healthcare from payment models to care models and even data analytics, and are a critical cog in the machine to ensure all of the parts are working together. More importantly, if EOCs are managed effectively, we will all enjoy the anticipated benefits of a pay-for-results environment: better care, lower cost and better outcomes all around.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.​

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