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HCTTF Offers Clinical Episode Grouper Resources for Bundled Payments

Defining the scope of clinical episode groupers for bundled payments can be a challenge for payers, says the Health Care Transformation Task Force.

Bundled payments and clinical episode groupers

Source: Thinkstock

By Jennifer Bresnick

- The Health Care Transformation Task Force (HCTTF) has released a new set of resources to support payers as they develop innovative bundled payment programs.

In a white paper titled Episode Groupers: Key Considerations for Implementing Clinical Episode Models, HCTTF offers guidance on how to develop the analytics logic to group services into standardized bundles for reimbursement.

“Groupers apply a series of decision points to patient data to ultimately assign the patient’s episode to a specific category. Episode groupers determine the way claims are bundled together, the events that trigger (initiate) or include an episode, and the quality of data outputs that can be used to assess performance or resource utilization,” HCTTF explains in the paper.

As bundled payments become more popular as a way to control costs and ensure high-quality care, both payers and providers must be on the same page about what is included in an episode, how to adjust for a patient’s clinical severity, and how reimbursement will be applied.

However, because episode grouper software tools are highly customizable, and different payers may use unique criteria for including or excluding services in their payment bundles, the industry is in need of more standardized strategies for combing through claims data to create well-defined episodes of care.

READ MORE: Medicare Bundled Payment Programs Primed to Produce Savings

“These tools will help to simplify the process for payers and providers to develop bundled payment arrangements to drive high-quality, patient-centered specialty care for their patients,” said Dave Terry, CEO of Archway Health and co-chair of the Task Force’s Advanced Payer/Provider Partnerships Work Group.

“The promising results from bundled payment initiatives in the Medicare program demonstrate that there is significant potential for clinical episode models to drive cost savings and quality improvements in the commercial market.”

The report builds upon work completed in 2014 by the National Quality Forum (NQF), which concluded that episode groupers should be further evaluated for transparency, reliability, and intended use.

“The use of episode groupers to better understand healthcare costs, in concert with the limited transparency and inherent complexity of their methodologies, has created the need for an evaluation framework,” HCTTF says.

The process should begin by identifying the focus and duration of the episode, the group states.  While most payers and providers are already comfortable with single-provider episodes, the framework focuses on multi-site and multi-provider situations, such as population health management tasks. 

READ MORE: Bundled Payments Require Clinical Insights, Provider Buy-In

“Identifying what triggers an episode and what type of clinical episode should be started are key to how a grouper defines and constructs an episode. The first step in evaluating groupers is to identify those that match the scope of the episode of interest,” says the report.

Insufficient data or poor quality data on services rendered can complicate the process of flagging he start of an episode of care, HCTTF warns.

“It is also important to recognize the specificity and sensitivity of triggers or rules used to begin an episode.  It can be helpful to think of claims as signal carriers: those signals are diagnosis codes, revenue codes, procedures codes, or other codes. The decision to open an episode can vary based on the perceived strength of the signal carrier (e.g. facility claim) and/or the strength of the claim signal.”

Organizations should pay close attention to false positive triggers as well as false negatives, and reevaluate the sensitivity of their episode grouping software accordingly.

Payers and providers will also need to make careful decisions about assigning patients to clinical episodes.

READ MORE: How Payers Can Build a Successful Bundled Payment Strategy

Traditionally, illnesses and conditions have been grouped into “families” representing similar areas of concern or similar outlay of resources to treat.

“As the understanding of these events has grown, so has the specificity with which each is defined, diagnosed and treated,” HCTTF says. “That specificity does not always translate to a meaningful distinction for payment purposes because the resources used to treat the different types of an illness, disease or injury can be similar or almost identical.”

“As such, when selecting the diagnosis codes that identify an episode of care for a bundled payment, decisions must be made about whether to maintain a high degree of specificity (‘splitting’), or to group more broadly (‘lumping’).

Each strategy has its benefits, but each also comes with challenges, as well.

“When episodes are broadly defined, probability risk arises,” the white paper explains. “The more patient categories that exist within a grouper, the more clinical and resource variation will be preserved.”

“However, if episodes are designed too broadly, specific treatments and associated resources can vary so significantly that a change in the internal mix of episode sub-types will have a significant effect. Maintaining too many patient categories will mean some have excessive variation in predicted costs, leading to inaccurate payments. While case mix adjustment can compensate for some of that risk, it may not always reliably do so.”

Overly narrow definitions can lead to low frequency of each type of episode, creating challenges when trying to estimate the costs and revenue for care. 

Too many categories may also create challenges for risk adjustment.  Creating brand new definitions for nearly every patient based on their diagnoses, pre-existing conditions, and socioeconomic issues may defeat the purpose of employing bundles for payment.

Payers and providers will need to develop a balanced approach to the right level of granularity for their clinical and financial needs.

The last major challenge will be deciding how claims are applied to clinical episodes.

“At a fundamental level, groupers are designed to categorize patient episodes into groups. The process of attributing costs is a second step, after the groups are defined and identified. However, because groups also tend be defined based on resource similarities, the steps tend to be iterative,” the Task Force notes.

“Depending on the grouper’s focus, the rules for cost attribution are often complex due to multiple diagnosis and procedure codes that may fall within a single patient episode. For example, should the care provided to a patient who was injured in a car accident on the way home from the hospital following hip replacement surgery be included in the episode bundle for the hip replacement?”

Payers must also carefully analyze claims line by line to ensure that every service is appropriately accounted for, the Task Force added.

“Lines typically include a procedure or revenue code, and one or more diagnosis codes to denote the medical reason for the service. Some can be very ambiguous, representing signs or symptoms of a condition or illness rather than the specific condition.”

“Grouping claims to episodes requires making decisions about whether to assign each line separately or assign claims in their entirety,” said the report.

The complexity of managing episode groupers should not be underestimated, the Task Force concluded, and payers will need to work closely together – and with their providers – to create standardized approaches to bundled payments.

“There is not a ‘one-size-fits-all’ approach to episode grouper technology, and the vast array of customizable options can pose significant challenges for both payers looking to implement these technologies and providers who are considering entering into payment arrangements,” said the white paper.

“The information provided in this report will hopefully serve as guidance for those seeking to better understand the underpinnings of episode grouper design.”

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