The Episode Classification System is intended to perform two tasks. First, it will be a prospective capitation risk adjuster and predict future health care costs. It will do this by assigning each individual a single capitation risk adjustment category based on an analysis of the medical history and of health care services rendered during a specific period of time. Second, the Episode Classification System will create retrospective severity adjusted Episodes of illness or Episodes of Care. These latter Episodes will provide a framework for relating patient characteristics to the amount, type, and duration of services provided during the treatment of a specific disease. These Episodes will give users the ability to understand past costs and the risk of mortality. As such they will form the basis for provider profiling by allowing users to analyze a complete clinical episode.