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Assessing risk based on episodes of care: software helps MCOs identify future risks and rally resources. (Managed Care).

Risk and cost can be dangerous words. Too much of the unmitigated former can lead to too much of the uncontrolled latter. For managed care organizations (MCOs), health plans and pharmaceutical organizations, that can spell trouble.

As health plans and MCOs strive to better assess, adjust for and manage the health risk of their members and its subsequent financial ramifications, the nature and quality of tools they use influence their long-term success. Risk assessment tools of the past, and even the present, have focused on diagnoses from, and costs of, patients' individual medical encounters. Whether founded on analysis of diagnoses or costs, these tools have retained the provision of healthcare service within an isolated encounter as the focal point and measurement instrument.

Take a giant step forward and consider Episode Risk Groups[TM] (ERGs) as a significant shift in approach to risk assessment and adjustment. ERGs represent the intellectual capital (and proprietary software) of Symmetry Health Data Systems Inc. of Phoenix. They are a derivative product based on Symmetry's Episode Treatment Groups[TM] (ETGs), an illness classification system that identifies episodes of care, not single encounters, that include treatment a patient has received as an inpatient and/or outpatient, with inclusion of prescription drugs, around an incidence of disorder or disease. The shift is from a focus on an individual instance of utilization to the collective utilization of medical and pharmacy services used to identify and ameliorate, or at least control, a medical condition.

According to Mitchell A. Portnoy, M.P.H., the company's co-founder and chief operating officer, ETGs are already used in about 400 health plans, MCOs, pharmaceutical organizations and employer organizations nationwide that represent more than 100 million individuals, and they are approaching a 95 percent market share penetration. ETGs have become an industry standard, says Portnoy, and are tools that typically are embedded and deployed in turnkey products from other vendors or licensed directly from Symmetry by organizations that create their own unique solutions.

Inside ETGs

Episode Treatment Groups construct a complete treatment episode--the occurrence of disease or disorder, and the healthcare services and drugs to diagnose and treat it--and reflect costs for that episode based on individual claim costs. Once an episode has started, the software continually collects and aggregates clinical data and cost data relevant to the episode until it detects the end of treatment or a "clean" period.

There are almost 600 separate "episodes of care" classifications into which utilization of services and pharmaceuticals can be categorized. A few examples are:
(#168) Migraine headache,
(#268) Congestive heart failure
 without comorbidity
(#436) Ulcer, complicated,
 with surgery

ETG methodology adjusts for case mix by factoring differences in patient age, comorbidities and complicating conditions into the definitions of the treatment groups.

Forward to Risk Assessment

ETGs are a tool for measuring provision of and cost of healthcare delivery. As such, they are used by analysts to compare the financial performance of providers and by clinicians to assess healthcare demand and utilization. Because they include pharmaceutical data, ETGs also are used in planning disease management (DM) strategies.

But their potential is greater yet. The nature and mix of episodes of care for each health plan member can provide a clinical profile of that member that serves as a marker for his current and future medical needs. Portnoy says that until recently, health plans would use ETGs for provider profiling, utilization analysis and DM development, and another technology for risk assessment, financial modeling and rate-setting strategies. The evolution of Episode Risk Groups allows MCOs to use the familiar ETGs as a foundation in an integrated, seamless step forward to an analytical risk assessment tool.

In mapping ETGs to ERGs, developers elected to collapse the nearly 600 episode designations of similar clinical and risk characteristics into creation of 119 ERGs. The 119 risk groups are further categorized into one of 22 major practice categories (MPCs). Examples of ERGs and MPCs are:
MPC 2 Endocrinology

ERG 02.01 Insulin dependent diabetes
 with comorbidity
ERG 02.04 Non-insulin dependent
 diabetes, without
ERG 02.06 Hyperlipidemia

MPC 10 Pulmonology

ERG 10.01 Acute bronchitis
ERG 10.03 Chronic bronchitis
ERG 10.04 Emphysema

The 119 ERGs serve as risk markers of a health plan member's risk. Each member has a risk profile based on the ERGs into which all of his ETGs have been categorized. The member's risk score is determined this way:

1. Each member's medical and pharmacy services are assigned to individual episodes of care using ETG classifications.

2. Then, all of the member's ETGs are analyzed and mapped into appropriate Episode Risk Groups.

3. A member profile is created by examining the ERGs into which the member's episodes of care have been mapped, along with the member's demographic characteristics.

4. Using pre-determined weights (or weights developed by the health plan) assigned to each ERG, a risk score for each member is calculated and the health risk of the member is projected.

5. Because acute conditions usually have greater influence on retrospective risk, while chronic conditions have greater impact on current and future risk, members are assigned both retrospective and prospective risk scores.

Using Data for Decisions

"What MCOs and health plans want," says Portnoy, "is help in measuring and managing risk. From a financial modeling perspective, they want to pre-identify populations that will exert greater clinical and financial stresses on the organization's future resources. They want to influence what future expectations could be based on the analysis of historical data."

One of the strengths of ERGs, he says, is that so many healthcare organizations already use ETGs, and ERGs represent a natural next step without having to incur additional IT installation costs or learn a new clinical, analytical or financial language.

"ETGs have been a self-identification tool with which an MCO can assess member utilization and its own health, past and present," says Portnoy. "Now, ERGs provide the basis for which MCOs can predict future resource requirements and stratify the premiums they assess employer groups in a highly granular way. As an IT tool, ERGs are about a better understanding of how healthcare services are used and paid for, so the organization can more accurately understand its financial risk in going forward."

Aside from cost savings achieved through a single set-up and installation plus lower licensing fees, another advantage, says Portnoy, is an MCO's ability to drill down in the data--way down. "The unit of analysis at a particular aggregation level remains the patient and the episodes of care a patient has experienced. Analysts can drill down from a patient's ERG risk score to all episodes of care the patient has experienced, right down to individual claims for doctors' appointments or drugs."

In this way, he says, ERGs may contribute to identifying best outcomes in an evidence-based medicine environment. While MCOs may be reluctant to include a newer, higher-price drug in their formulary, ERGs "can uncover which pharmaceutical agents produce the best outcomes and prevent recidivism. They allow an MCO to work smarter because they help identify which interventions work in a real-world environment to alleviate conditions and prevent recurrence."

Next up, says Portnoy, is integration of laboratory and radiology results into ETGs. "The information captured by ETGs and ERGs is based on the the same data that has been captured for years--but recast. Its purpose is to allow the MCO to understand characteristics of a patient type or population, and to subsequently rally appropriate resources. "We're trying to develop IT tools that give healthcare organizations the ability to look over the horizon--and know what's coming."
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Article Details
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Author:Blair, Robin
Publication:Health Management Technology
Geographic Code:1USA
Date:Feb 1, 2002
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