VH Insights

August 10, 2018

Episodes of Care for Chronic Disease Management

The future of care management will revolve around episodes of care. By leveraging insights captured by episodes of care, healthcare organizations will have the ability to look across the continuum of care and determine how to better engage members, decrease costs, improve outcomes, and overall satisfaction for the right member, at the right time, with the right services.

So what is an episode of care? Defined by The National Committee for Quality Assurance (NCQA), an episode of care is a 'series of temporally contiguous healthcare services related to the treatment of a given spell of illness, or provided in response to a specific request by the patient or other relevant entity'. (1)

Now let's dive one step deeper beyond this formal definition, and focus on what the concept of an episode of care is. At VirtualHealth, episodes of care are conceptualized as a patient-centered, quantitative and qualitative approach to capturing healthcare values and resources within the continuum of care. This involves all clinically relevant services for one patient, for one specific diagnostic condition, from the onset of symptoms until the completion of treatment.Within this working conceptual framework, one episode of care only pertains to one patient, but...one patient can have multiple episodes of care.

If you are saying to yourself 'Wait! I have heard about care episodes, but only in the context of payments or reimbursements'. Well, you are right. Within the U.S. healthcare system we most often discuss episodes in the context of episode-based payments. The term episode-based payments was first seen in the mid 1990's (2) with Episode Treatment Groups (ETGs), and more recently within the context of bundled payments as part of the Patient Protection and Affordable Care Act (3). So how does an episode of care differ from an episode-based payment? Well they can work together, or be mutually exclusive.

An episode-based payment (for example a bundled payment) is a single payment for the treatment of all care delivered for a health event or condition. For the example if a hip fracture requires a total hip replacement, an episode-based payment is the payment for all medical services delivered for the total hip replacement, from acute care to follow-up care and rehabilitation. Versus an episode of care, which is focused on the medical services provided and not necessarily the payment for the care services delivered. An organization can implement an episode of care approach to care delivery regardless of their care delivery model, whether they incorporate a value-based care service model, fee-for-service model, or a new hybrid model that may involve bundled payments and some other mechanism.

How does an episode of care work? Let's take a look at a VirtualHealth member named Jacob. Jacob has one episode of care open for his diabetes, a second episode open for his hypertension, and a third open for his chronic kidney disease. For each unique episode, Jacob will be utilizing specific types of healthcare professionals, medications, and medical devices. In addition, for each episode of care a variety of different healthcare services can be provided for his diabetes, hypertension, and chronic kidney disease care. So by utilizing an episode of care approach for Jacob we can efficiently delineate engagement, utilization, and care outcome longitudinally within and between his multiple comorbid conditions.

In addition, episodes of care allows us the flexibility to track the key components of Jacob’s care across the continuum of care from being within a 1) populations at risk, 2) evaluation and initial management, and 3) |follow-up care and monitoring for chronic conditions. For Jacob we would classify his diabetes in the 'evaluation and initial management' phase because his HbA1C is not yet well-controlled, his hypertension within the 'monitoring' phase since it is now under the recently revised blood pressure guidelines of under 120/70, and his chronic kidney disease stage under initial management as he is receiving nutritional and weight management counseling.

So what other types of benefits are there to implementing an episode of care approach we haven't already highlighted? There are many, but here are two that relate to the issue of being able to manage rising healthcare costs

  • $ Cost Awareness: It goes without saying that different conditions generally cost different amounts of money and use different resources. By connecting the right resources, time, and dollars to conditions, we can enable a system to discover average cost of use, allowing for case-mix adjustment and overall efficiency of care delivery.
  • $ Cost Drivers: Do you know what piece of diabetes care drives cost variation between or within members? What opportunities may exist to shift members to a better price point? Episodes of care allows healthcare organizations an improved framework to look across and within member populations to understand which conditions drive costs. As conditions are treated through an episode of care approach, healthcare professionals can foresee how to standardize, yet tailor episode focused resources, decrease within and between member cost variation, and allow for more predictable operations in a typically unpredictable landscape. Greater predictability means more precise budgeting and use of resources

With our definition of episodes of care at VirtualHealth, we capture the who, what, when, where, and general trends of why our members interact and utilize healthcare resources. Episodes of care is just one of many ways VirtualHealth empowers healthcare organizations to better understand and serve their members.


  1. Measurement Framework: Evaluating Efficiency Across Patient-Focused Episodes of Care. (n.d.). Retrieved April 23, 2018, from
  2. O’Byrne, T., & Naessens, J. (n.d.). Episode-based Treatment: Evaluating the Impact on Chronic Conditions. Retrieved April 23, 2018, from
  3. The Affordable Care Act: Helping Providers Help Patients A Menu of Options for Improving Care. (n.d.). Retrieved April 23, 2018, from