EOC Will Have a Broad Impact On State's Healthcare Providers

A Key Strategy to Reduce Costs and Increase Quality of Services

Across the country, many states, organizations and insurance companies are implementing value-based payment models in search of ways to curtail costs, improve quality, and better meet the healthcare needs of their diverse patient populations. Tennessee is no different.

Governor Bill Haslam launched the Tennessee Health Care Innovation Initiative (THCII) which is dedicated to transforming the way healthcare is delivered to Tennesseans. Episodes Of Care (EOC) is one of the three key strategies focused on value with a specific objective to reduce costs and increase quality on acute or specialist-driven services.

The episodes of care model has a broad impact across healthcare providers from primary care to specialists to hospitals. The state plans to generate 75 episodes of care ranging from a simple respiratory infection (e.g. sinusitis, bronchitis) to surgery (e.g. total joint replacement). As of today, there are 19 episodes in performance period, which means the state holds providers accountable for the quality and efficiency of care they deliver to their patients. Beginning last month, there will be 11 more episodes in preview period - a critical time where providers can evaluate data and prepare for a 2018 performance period.

Unlike many bundled payment systems (which may be prospective), episodes of care is a retrospective system where financial incentives and penalties are implemented at the conclusion of a performance period. To help alleviate the transition to value-based model, the Tennessee State Planning and Innovation Group (HCFA) with McKinsey, a third party consulting group, generated a model utilizing claims data. What this means to providers is an unchanged billing process.

It also means patients will seek care with the health system as they usually do today. However, what is new is that the provider will receive a detailed report based on a defined patient's journey. This information is available to help practices and hospitals make changes to improve patient care through reduced utilization, improved inefficiencies, and better coordination of care.

The particulars of the EOC model can be complex, but it is designed to utilize claims data with some exceptions. It is important to note a few key mechanisms that drive the model such as quarterback designation, risk adjustment factors, costs, quality measures (QM), and what is the defined time frame (window).

Often, the first question providers ask is, "Am I a quarterback?" The definitive answer is: it depends. A quarterback or principal accountable provider (PAP) can be either a provider or facility deemed to be in the best position to control cost and quality.

Quarterbacks receive detailed EOC reports to help drive health system change, and are eligible - based on episode cost and quality standards - for gain sharing or financial penalties (based on high costs). So, even if someone is not a designated quarterback, he or she may impact organization's metrics and episode spend by providing upstream or downstream patient care services.

The next important EOC element is a window or duration defined by each unique episode model (e.g. prenatal, ADHD). Knowing the window duration helps providers and practices understand what parameters are set in order to capture relevant costs and quality measures associated with each episode.

There are three distinct time frames which are referred to as a pre-trigger, trigger, and post-trigger window.

* A pre-trigger window is important because it is the earliest point at which claims (i.e. costs and quality metrics) associated with the procedure (or diagnosis) can be captured for the specific episodes of care. For example, perinatal episode looks at the Group B Strep screening lab claim in the pre-trigger episode window.

* A trigger window begins on the day the patient has a procedure (e.g. cholecystectomy) or is diagnosed (e.g. UTI). Each episode is specifically designed to trigger based on a particular (or a combination of) CPT, ICD-10, and/or place of service (POS) codes. For example, the perinatal trigger window occurs at time of delivery and ends when the patient is discharged (if at an inpatient facility).

* A post-trigger window begins the day after the trigger window ends and extends for a specific timeframe, which can vary by episode. For example, cholecystectomy post-trigger window begins the day after the trigger window ends and extends for 30 days. This is significant because it is the farthest point at which relevant claims and quality metrics can be captured for the episode. To understand the range of services associated with each episode, such as evaluation and management, labs, and medications, check out the coding algorithm (coding summary) on line at Tennessee Health Care Innovation Initiative.

In today's value-based environment, it is important to reflect relevant risk or severity of illness for population health reporting and reimbursement. As such, coding is the means in which a provider can illustrate and capture risk. Risk adjustment permits for fair comparison amongst valid episodes.

Coding also helps identify patients who should be excluded from the episodes. Risk adjustment methodology and risk factors (RAF) are specific to each MCO. As part of practice strategies, it is essential to obtain and understand the methodology and RAF associated with each episode design. Remember - episodes of care is a retrospective claims based system. Therefore, if a diagnosis code is not included on claims it is NOT being captured.

Finally, it is imperative for providers to be proactive - despite the administrative burdens and challenges this new process can create - by accessing and evaluating reports. These reports can be an opportunity to understand current cost drivers and identify areas to improve clinical, financial and operational systems.