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HERC Health Economics Seminar

The Analysis of Variation in Cost of Care - An Episode Of Care Methodology

by David Redfearn, Ph.D.
Seminar date: 8/17/2011

Description: This presentation provides an overview of the physician cost-efficiency analysis methodology currently used at WellPoint. The goal of this methodology is to provide an accurate, fair, and statistically reliable measure of physician cost efficiency. This methodology is built on an episode of care foundation; key features of the (Ingenix) Episode Treatment Group model are described. Once the episode data is available, a number of other difficult issues need to be addressed: patient risk-adjustment, building cost norms and defining appropriate comparison groups, assigning a “responsible” provider for each episode, developing an appropriate statistical methodology to reliably classify performance, and determining the correct unit of analysis (physician vs. group). We have made specific methodological decisions in this process, but reasonable alternatives are available and these are noted when appropriate.

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