Combining Episodes Creates New Opportunities in BPCI Advanced

Submitted by jonpearce on Thu, 2018-05-10 16:23

In the BPCI program many hospitals and physicians selected individual episode families in which to participate. Providers participated in major joint replacement, congestive heart failure, simple pneumonia, and other similar types of episodes that have sufficient volume to create statistical stability and sufficient return on the care management investment. Most didn't participate in lower volume episodes such as AMI or cardiac arrhythmia because the episode volumes in those individual episodes were insufficient for stability or didn’t provide a sufficient financial opportunity. However, as BPCI participants view the upcoming end of that program and the opportunity to participate in its successor, they may be looking for additional opportunities to improve care and create savings beyond those episodes, particularly in clinical areas in which they have already been successful.

These opportunities may arise in the form of participation in a number of clinically related episodes in which the individual episode finds may not be sufficient to achieve stability, but in combination with other episodes creates a workable option. Clinically similar episodes may utilize the same care management processes and resources, which provides a financial return on those resources if applied successfully. Although individually their episode costs vary widely, those variations offset each other when combined together. Importantly, these episodes must each have an opportunity for clinical improvement. Simply adding unrelated episodes simply to boost episode volume is unlikely to be successful.

Assessing clinical consistency

At a high level, clinically similar episodes can be analyzed using the graphic below. This shows the proportion of each episode’s cost in each of the major episode cost components. In the three episode types shown below, each has approximately 35-40% of the episode cost in the index admission and physician payments, which are largely fixed and are not opportunities for cost reduction. Each also has significant SNF utilization, moderate HHA utilization, and a high proportion of readmission cost. At this point, these episodes appear to be good candidates for the combined episode.

Since readmissions are significant component of the cost of these episodes, it's also useful to look at the diagnosis categories of these readmissions to assess their consistency across the episode families being considered. Consistency here may indicate that common care management processes may be applied across these episodes. The graph below shows the major diagnostic categories (MDCs) of the readmissions occurring in each of the selected episode types. The relevant symmetry in each of the bars appears to indicate that patients in each of these episodes are readmitted for similar diagnoses, indicating that care management processes may be applicable across all three episode families. This is a further indication that combining these episodes could be successful.


Further analysis of clinical opportunities is necessary at this point. Support from the clinical teams in each area is essential, and the care management processes in place would need to be reviewed to assess their effectiveness in all of these areas.

Effect on episode variability

A primary reason to combine low volume episodes is to increase the total savings opportunity and to decrease episode cost variability across time periods. The graph to the right shows how the average quarterly episode cost varies for each of the individual episode families. This graph shows the significant variation over time in each of the episodes, but also shows how this variation is independent and frequently moves in opposite directions. In particular, note that episode cost for CHF and AMI both increase in Qtr 1 2015, but episode cost for cardiac arrhythmia decreases. A similar offsetting effect occurs in Qtr 2 2016.




Episode Family

Quarterly CV

Acute myocardial infarction


Cardiac arrhythmia


Congestive heart failure


Total composite


The net effect of these changes is shown in the adjoining table. This table shows the "coefficient of variation" (the standard deviation of quarterly episode cost divided by its mean) for each of the individual episode families and for the composite of all three episode families. The cost variation of the combined episodes is about one third lower than that of CHF, the highest volume of the three individual episode families, indicating that the combination of episodes has more stable cost over time than each of the individual episodes.

The quarterly episode cost for CHF, and for all episodes, is shown in the two graphs below. The combination of episodes has increased the total episode volume by slightly over $1 million, and has reduced the quarterly episode cost variation as described above. Overall episode costs for the combination are about $2 million higher than for CHF alone, which may indicate a higher opportunity for cost saving, and the random variation in episode costs is lower which creates a higher level of financial stability.

Maintaining the proper mindset

In working with episode combinations it’s important to view them as a whole, not as individual components. Costs for each episode type vary randomly across time, and the variations of lower-volume episodes will be larger. If the episodes selected are clinically coherent and the care management processes across the episodes are uniform, they can be evaluated collectively without “drilling down” to the individual level, whose cost variations may be more affected by randomness than by patient characteristics or care management.

Also see this article on episode combinations from  our 2015 blog.