Population Health & Episode-Based Care Advanced Payment Models

Author: ASA Committee on Economics
October 2024

What is population health?

Population health was defined in 2003 as “the health outcomes of a group of individuals, including the distribution of such outcomes within the group” (Kindig & Stoddart, 2003). Viewed through a wider lens, population health also includes health outcomes, health disparities, social determinants, and risk factors (Boudreaux & Vetter, 2016). The Centers for Medicare and Medicaid Services (CMS) defines population health through a broader lens as the “health behaviors and outcomes of a group of individuals” (CMS Population Health Measures Supplemental Material, 2023).

How does population health relate to public health?

While at times the terms “population health” and “public health” are used interchangeably, public health tends to focus on improving the health outcomes of the public at large (APHA), while population health tends to focus on outcomes of a specific group of people or community within the public (Kindig & Stoddart, 2003).

How can anesthesiologists play a role in population health?

Anesthesiologists can play a role by orchestrating a patient’s perioperative optimization. Direct engagement with the entire spectrum of patients in need of acute surgical care places anesthesiologists in a unique position to implement targeted initiatives including, but not exclusive to, smoking cessation, glycemic optimization, anemia management, and prehabilitation.

Preoperative Phase	Intraoperative Phase	Postoperative Phase	Post-Discharge Phase
Smoking cessation Anemia management Glycemic optimization Prehabilitation Patient and caregiver education Other perioperative optimization strategies	Early recovery care pathways Peripheral nerve blocks and acute pain management Multimodal pain management Glycemic management Temperature management	Acute pain service follow-up Glycemic management Smoking cessation support Early extubation Postoperative MME reduction	Avoidable readmission reduction Emergency department utilization reduction Higher patient experience ratings
Perioperative surgical home Perioperative optimization programs Early recovery after surgery
Episode-based care alternative payment models
Population health

Sources:
Hirji, S.A., Salenger, R., Boyle, E.M., Williams, J., Reddy, V.S., Grant, M.C., Chatterjee, S., Gregory, A.J., Arora, R. and Engelman, D.T. (2021), Expert Consensus of Data Elements for Collection for Enhanced Recovery After Cardiac Surgery. World J. Surg., 45: 917-925 1. https://doi.org/10.1007/s00268-021-05964-1
Boudreaux AM, Vetter TR. A Primer on Population Health Management and Its Perioperative Application. Anesth Analg. 2016;123(1):63-70. doi:10.1213/ANE.0000000000001357

How does population health fit with alternative reimbursement options such as Alternative Payment Models (APM)?

Population health measures within APMs provide incentives to achieve improved health outcomes among specific patient populations. Examples of measures used in APMs include postsurgical complications, access to care, and excess days in acute care. A bundled, or episode-based payment, is type of APM that incentivizes quality of care and cost effectiveness while setting a predetermined budget for the care cycle for a given clinical episode (NEJM Catalyst, 2018). Population health measures in acute care episode-based payment models such as bundled payments highlight the importance of care coordination inherent to perioperative optimization programs.

How are episode-based payment models relevant to anesthesiology?

Successful participation in episode-based payments requires significant care coordination, making them more challenging to adopt than fee-for-service. Perioperative optimization clinics, early recovery after surgery (ERAS), and the perioperative surgical home contribute to reduced post-surgical complications, lower length of stay, and cost savings. In an accountable care organization or other value-based payment model, this risk reduction can translate into greater financial reward for the health care system and anesthesia group.

Episode-based care models focus on health outcomes for specific clinical episodes or surgical procedures during a defined period (e.g., 90 days in the Bundles Payments for Care Improvement-Advanced model). Therefore, adoption of episode-based care models and increased focus by anesthesiologists on the perioperative surgical home, enhanced recovery after surgery, and anesthesia preoperative optimization are complementary due to their impact of improved downstream outcomes.

Increased focus on patient outcomes will continue to drive the need for perioperative optimization and highlight the effective role anesthesiologists can play in orchestrating care in a patient-centered manner, while reducing avoidable down-stream costs. However, it is important for anesthesiologists to demonstrate the value that perioperative optimization initiatives bring to hospitals participating in episode-based payments and quantify the anesthesia group’s share of any financial gains from these models (Newton & Bader, 2024).

How is care reimbursed under alternative payment models?

Alternative payment models such as accountable care organizations and bundled payments are calculated using attribution methods specific to each model. Attribution refers to the method used by insurers to align patients to a specific clinician and calculate clinical spend. Attribution methods can be based on a proportion of claims billed for services provided (claims-based attribution) or by allowing insured patients to choose a clinician prospectively (voluntary-attribution). For example, accountable care organization models may attribute patients to a clinician if they bill most of a specific set of CPT codes describing clinical care rendered. In an episode-based care model, CPT codes associated with a specific clinical encounter (e.g., total knee replacement) and billed within a specific time period (e.g., 90 days) are bundled together and used to calculate the final spend. In alternative payment models, total care spend is compared to a budget and clinicians are reimbursed based on performance relative to quality and financial targets.

What is on the horizon for population health and episode-based payments in the U.S.?

There is continued, iterative momentum towards advanced episode-based payment models as a mechanism to curb U.S. health expenditures while increasing or maintaining quality of care. In April 2024, the CMS Innovation Center proposed the Transforming Episode Accountability Model (TEAM), a mandatory five-year episode-based alternative payment model which seeks to integrate specialty and primary care. The model is set to begin in CY 2026 if approved in the FY 2025 Inpatient Prospective Payment System rule.

References:

Boudreaux AM, Vetter TR. A Primer on Population Health Management and Its Perioperative Application. Anesth Analg. 2016;123(1):63-70. doi:10.1213/ANE.0000000000001357

Hirji, S.A., Salenger, R., Boyle, E.M., Williams, J., Reddy, V.S., Grant, M.C., Chatterjee, S., Gregory, A.J., Arora, R. and Engelman, D.T. (2021), Expert Consensus of Data Elements for Collection for Enhanced Recovery After Cardiac Surgery. World J. Surg., 45: 917-25. https://doi.org/10.1007/s00268-021-05964-1

Kindig D, Stoddart G. What is population health? Am J Public Health. 2003 Mar;93(3):380-3. doi: 10.2105/ajph.93.3.380. PMID: 12604476; PMCID: PMC1447747.

NEJM Catalyst. What are bundled payments? February 28, 2018. Accessed July 18, 2024. https://catalyst.nejm.org/doi/full/10.1056/CAT.18.0247

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