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The American Journal of Managed Care November 2017
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Validation of a Claims-Based Algorithm to Characterize Episodes of Care
Chad Ellimoottil, MD, MS; John D. Syrjamaki, MPH; Benedict Voit, MBA; Vinay Guduguntla, BS; David C. Miller, MD, MPH; and James M. Dupree, MD, MPH

Validation of a Claims-Based Algorithm to Characterize Episodes of Care

Chad Ellimoottil, MD, MS; John D. Syrjamaki, MPH; Benedict Voit, MBA; Vinay Guduguntla, BS; David C. Miller, MD, MPH; and James M. Dupree, MD, MPH
The Michigan Value Collaborative has created a claims-based algorithm that categorizes claims into episode components. This manuscript describes the validation of this algorithm.
Previous investigators have convincingly demonstrated that variation in episode spending is largely due to postdischarge events.3,11-16 Preventable readmissions and variations in postacute care could indicate areas to improve hospital efficiency and outcomes. Others have also validated and demonstrated on a health-system level the success of claims-based algorithms in identifying hospital events.17-19 Existing literature has demonstrated the effectiveness of utilizing these tools to identify high-cost inpatient events and improve the value of care.20 It is reasonable to believe that by using this same approach to identify postdischarge events, institutions could potentially achieve similar results outside the hospital setting. The current study findings demonstrate, on a large statewide scale, that accurately identifying and measuring postdischarge utilization may be difficult for hospitals using medical records alone. A claims-based algorithm could better identify postdischarge events, especially those that occur outside hospitals’ networks. With the current national focus on episode efficiency, identification of these events is imperative to driving high-value care. 


Our study has several limitations. First, we only included BCBSM patients in our validation process. Due to CMS privacy restrictions, we were unable to validate our algorithm with Medicare beneficiaries. Second, the MVC algorithm may not be generalizable for other commercial payers, although BCBSM is the largest commercial payer in Michigan. Third, we did not have hospitals look for readmissions that occurred outside of the hospital where the index event occurred. This decision was primarily made to reduce the chart review burden to hospitals; we received early feedback that hospitals could not identify these particular events. Finally, we did not validate our classification algorithm for other postdischarge events (eg, outpatient procedures) and intensity of services (eg, SNF length of stay). However, this study was focused on validating the occurrence of major postdischarge services. Although we did not end with perfect agreement between the MVC data and the medical records, there were only a few events identified by hospitals not seen in MVC claims (0.5%-4%). 


Our findings will help stakeholders understand the opportunities and challenges of using a claims-based algorithm to measure episode spending. Relevant to hospital administrators, the finding that the claims-based algorithm used in this study outperformed medical records suggests that such data provide more complete intelligence about the postdischarge period. This finding should encourage hospital administrators to obtain additional claims data by participating in a statewide, regional, or health-system collaboration and by asking payers to share these data. Without these claims data, hospitals will be limited in their ability to measure and optimize services provided outside of their facilities. This is particularly important as CMS and commercial payers are increasingly using episode-based performance measurement and payment bundling. 

Moving forward, research in this area should focus on how these data can be refined to provide more granular information to hospitals. For instance, providing hospitals with data on the average length of stay and intensity of services provided at SNFs may help providers understand the efficiency of facilities where patients are sent after discharge. Ultimately, the value of episode-based performance measurement and bundled payment programs as mechanisms to drive high-value care will strongly depend on the accurate measurement of episode-level payments and utilization. 


The authors thank Dr Vinita Bahl (University of Michigan), Kelly Rice (Beaumont Health System), Steve Lewis (St. Joseph Mercy Health System), Meghan Coughlin (MidMichigan Medical Center), and John Robertson (Hillsdale Community Health Center) for their comments and insight during the course of this research. They would also like to thank Dr David Share, Ellen Ward, Tom Leyden, and the Value Partnerships at BCBSM for their ongoing support of the Michigan Value Collaborative and this manuscript.

Author Affiliations: Institute for Healthcare Policy and Innovation (CE, DCM, JMD), and Dow Division of Health Services Research, Department of Urology (CE, JDS, DCM, JMD), and Michigan Value Collaborative (CE, JDS, BV, VG, DCM, JMD), University of Michigan, Ann Arbor, MI.

Source of Funding: This research was supported by the Agency for Healthcare Research and Quality (1F32HS024193-01 to Dr Ellimoottil). Dr Miller receives salary support from Blue Cross Blue Shield of Michigan for his role as the director of the Michigan Urological Surgery Improvement Collaborative and the Michigan Value Collaborative. Dr Dupree receives salary support from Blue Cross Blue Shield of Michigan for his role as the co-director of the Michigan Value Collaborative and his involvement in the Michigan Urological Surgery Improvement Collaborative. Mr Voit receives salary support from the Michigan Value Collaborative as an account manager and is an employee of ArborMetrix.

Author Disclosures: The authors are employed by University of Michigan, which has a contract from Blue Cross Blue Shield of Michigan to operate the Michigan Value Collaborative. 

Authorship Information: Concept and design (CE, JDS, DCM, JMD); acquisition of data (CE, JDS, BV, DCM); analysis and interpretation of data (CE, JDS, BV, VG, DCM, JMD); drafting of the manuscript (CE, JDS, BV, VG, DCM); critical revision of the manuscript for important intellectual content (CE, JDS, BV, VG, DCM, JMD); statistical analysis (JDS, VG); provision of patients or study materials (JMD); obtaining funding (JMD); administrative, technical, or logistic support (CE, JDS, VG, DCM, JMD); and supervision (JDS, JMD). 

Address Correspondence to: Chad Ellimoottil, MD, MS, University of Michigan, 2800 Plymouth Rd, Bldg 16, 1st Fl, Room 100S, Ann Arbor, MI 48109-2800. E-mail: 

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