Surgical Episodes of Care for Price Transparency Using the Episode Grouper for Medicare

To explore the use of an episode grouper to more accurately identify the complete set of surgical services typically provided in a surgical episode of care and the corresponding range of prices, using colectomy for cancer as the example.

Price transparency is an important policy issue that will require surgeons to better understand the components and cost of care.

This study uses the Episode Grouper for Medicare business logic to construct colectomy surgical episodes of care for cancer using Medicare claims data for the Boston Hospital Referral Region from 2012 to 2015. Descriptive statistics show the mean reimbursement based on patient severity and stage of surgery, along with the number of unique clinicians billing for care and the mix of services provided.

The Episode Grouper for Medicare episode grouper identified 3182 colectomies in Boston between 2012 and 2015, with 1607 done for cancer. The mean Medicare allowed amount per case is $29,954 and varies from $26,605 to $36,850 as you move from low to high-severity cases. The intrafacility stage is the most expensive ($23,175 on average) compared with the pre ($780) and post ($6,479) facility stages. There is tremendous heterogeneity in the service mix.

Episode groupers are a potentially valuable tool for identifying variations in service mix and teaming patterns that correlate with a total price. By looking at patient care holistically, stakeholders can identify opportunities for price transparency and care redesign that have heretofore been hidden.