What is an Episode of Care?

An episode of care is a course of treatment for a medical condition, including everything from consultation with doctors to necessary medications. People with an interest in health care reform in some nations have suggested the episode of care as a pricing model, where doctors receive a flat fee on the basis of the services they will probably provide to treat a medical condition, rather than receiving a payment per procedure. This is an extension of the capitation model of health care billing, where a service provider gets a flat fee per patient.

The episode of care may be relatively brief, or could involve management of a chronic condition. In one example, a child could break an arm, requiring evaluation by an orthopedic physician, surgery to set the arm comfortably, medications to treat pain and prevent infection, and follow-up appointments to check on the progress of healing. After removal of the cast, the patient might need physical therapy to rebuild strength and dexterity. All of these services are a single episode of care, the successful diagnosis and treatment of the broken arm. In examples of more sustained care needs, a patient might need a longer episode of care to treat a condition like cancer, manage a pregnancy, or care for a chronic disease like asthma or diabetes.

The services care providers can expect to provide during an episode of care can vary, but it is possible to use statistical reports to get a general idea. These reports can be the basis of a billing scheme, determining how much money should be paid out to make sure the patient's needs are met. The goal is to discourage unnecessary procedures to pad the bill while also making sure a patient doesn't miss out on valuable testing and other treatments. Some patients may ultimately need fewer services while others need more, and their needs should balance out in the end.

Using episode of care pricing requires seeing patients in a managed care setting, where they get all their treatment through the same organization or facility. A patient who needs to see multiple care providers who are not part of a network would have to pay them separately. There are also some potential flaws with the model, such as determining how to account for comorbidities and complications. These can increase the cost of care and often do not fit neatly into a model, making it challenging to determine how much compensation to provide.