Episode Grouper for Medicare

An episode grouper is a proprietary software program that organizes claims data into episodes of care, usually linked to a diagnosis. Episode-based payment, or bundled payments, is an approach that pays providers lump sum to care for a patient over the entire course of a disease or clinical episode of care, instead of paying for each service individually. It has the potential to change coordination of care and improve quality.

In developing the prototype, the project team built upon ABMS REF’s prior work in developing resource use measures for a common set of acute and chronic health care conditions. The measure development process addressed episode definition, duration, identification of clinically relevant services, risk adjustment and attribution. The prototype focused on cardiac and pulmonary conditions. The outcome was a model based on a philosophy of patient-centeredness, clinical appropriateness, provider acceptance and policy relevance.

In March 2012, the Centers for Medicare & Medicaid Services awarded the project team collaborative a contract for build-out of the full episode grouper system for use in Medicare. The effort will result in defining enough episodes to cover 80 percent of Medicare spending and at least as much commercially.

Creating a standard definition for an episode of care expands the scope and reach of bundled payments and helps everyone understand what is contained within an episode such as diabetes or heart failure. It will help those who are creating the infrastructure to pay providers in this way and those developing consumer-facing tools to evaluate and compare providers’ bundled prices. Establishing episode payments changes provider financial incentives, potentially leading to greater clinical, operational, and financial alignment.