Development
In the 1980s and 1990s, the success of the Centers for Medicare & Medicaid Services (CMS) diagnosis related groups (DRGs) for hospital inpatient care prompted widespread interest in developing similar models for other applications. Since CMS DRGs define an episode as a single hospital stay, the obvious extension was to define broader episodes. For example, an episode might also include the cost of physician services and post-acute services such as rehabilitation.
Solventum, as the contractor to CMS for Medicare DRGs, was well-positioned to develop such models. Under contract to CMS and the Medicare Payment Advisory Commission (MedPAC), Solventum prepared analyses of episodes built around Medicare DRGs that were published in 2013 in the Medicare and Medicaid Research Review¹ and in a MedPAC Report to Congress.²
In parallel to its work developing episodes around Medicare DRGs, Solventum also developed the more comprehensive, proprietary Solventum PFEs. Solventum PFEs are appropriate for all populations, include both inpatient and ambulatory care and incorporate risk adjustment for baseline health status.
Design principles
These four principles guide the Solventum PFE design:
- Patient-focused. Most notably, the episode clinical model focuses on an individual’s total burden of illness. This approach differs from conventional disease-centered models that face the intractable challenge of separating services; for example, heart failure requires treatment and services distinct from those needed for lung disease. This is important because patients with interacting comorbidities are precisely those who are most expensive to care for and the most complex clinically.
- Uniform categorical clinical model. Solventum PFEs are a categorical clinical model, that is, a mutually exclusive and exhaustive set of clinical categories that differentiate individuals based on their total burden of illness. The underlying categorical model applies to all episode types, creating a uniform and stable clinical language. The model also remains unchanged across all potential configurations of episodes (window lengths, included services, etc.).
- Re-use well-established systems. Solventum PFEs are based on Solventum APR DRGs, Solventum EAPGs and Solventum CRGs, which are widely used for risk adjustment and payment systems.
- Independent, empirically derived relative weights. For each potential configuration of episodes used, a separate set of relative weights should be computed. Despite differences in configuration, relative weights reflect a stable clinical model, enabling a consistent clinical language.
Structure
For profiling comparisons or establishing payment levels, users of an episode methodology must calculate both actual and expected resource use by episode. In setting up a Solventum PFE analysis, users have broad flexibility in defining the time windows for episode identification and the Solventum CRG assignment, determining which services are included and excluded and defining the readmission logic.
Solventum PFE software performs two basic functions:
- Episode classification: Based on the patient’s claims history, each patient is assigned to event-based and/or cohort-based episodes. Event-based episodes start when a significant health care event occurs; a patient may be in only one event-based episode at a time. Cohort episodes are assigned to patients who share a common disease, condition or characteristic within a given time period. A patient may be in more than one cohort episode at the same time. Neither episode type attempts to isolate the services associated with any specific condition, but instead capture the patient’s entire resource needs during the episode. The patient’s baseline health status can be considered using the patient’s Clinical Risk Group (CRG) or Aggregated CRG.
- Episode accumulator: Based on the time window selected and the service categories included, actual expenditures are accumulated for each episode.
The actual expenditures that output from the accumulator can be used to compare against expected expenditures derived from relative weights.
The Solventum PFE clinical logic is maintained by a team of clinicians, data analysts, clinical analysts, programmers and economists. The logic is proprietary to Solventum but is available for licensees to view in the online Solventum PFE definitions manual. The methodology is updated annually to reflect changes in the standard diagnosis and procedure code sets and is regularly enhanced to improve the clinical logic.
Examples of Solventum PFEs
Event-based episodes:
- Inpatient Surgical Event (n = 51)
1001710 Permanent Cardiac Pacemaker Implant without AMI, Heart Failure or Shock
- Inpatient Medical Event (n = 49)
2001340 Pulmonary Embolism
- Outpatient Procedure Event (n = 135)
3000360 Level II Foot Procedures
- Outpatient Medical Event (n = 11)
4004980 Kidney Infections
Cohort episodes:
- Chronic Cohort (n = 96)
6000020 Parkinson’s Disease
- Acute Cohort (n = 25)
5000420 Cerebrovascular Infarction
- Pregnancy Cohort (n = 6)
8005401 High Risk Pregnancy w Delivery
- Population Cohort (n = 1)
7000000 Population
¹Vertrees J, Averill R, Eisenhandler, J, Quain, A, Switalski J. Bundling Post-Acute Care Services into MS-DRG Payments. Medicare Medicaid Res Rev. 2013;3(3):E1-E19
²Medicare Payment Advisory Commission. Approaches to bundling payment for post-acute care. Chapter 3 in Report to the Congress: Medicare and the Health Care System. Washington, DC: MedPAC, June 2013.
