New Insights About Episode Spending Among US Hospitals

In a recent publication in the Journal of Hospital Medicine, VSSL members Dr. Joshua Liao and Lingmei Zhou reported results from an analysis that provides the first nationwide description of hospitals’ episode-based spending based on publicly reported Clinical Episode-Based Payment (CEBP) measures.

Context: Payers such as Medicare have implemented strategies to improve value by containing hospital spending for episodes of care. However, compared with payment models, publicly reported episode-based spending measures is an under-recognized and under-recognized strategy.

Approach: The VSSL team used Medicare data from 2017 to assess how 1,778 hospitals nationwide performed on six episode-based spending measures. The study team examined spending variation and its drivers, correlation between measures for different episodes, and spending by cost performance categories. Key findings:

• Episode spending varied by CEBP type, with skilled nursing facility (SNF) care accounting for the majority of spending variation for procedure-based episodes but not for condition-based episodes

• There was low within-hospital CEBP correlation

Relevance: Variation reduction and savings opportunities in SNF care for procedural episodes suggest that they may be better suited for existing payment models than condition episodes are. Spending performance was not hospital specific, which highlights the potential utility of episode spending measures beyond global measures.