An episodes of care methodology examines the contiguous cluster of services related to a particular health condition. We developed an episodes methodology for evaluating the quality of health care delivery to privately insured adult asthma patients. Computer algorithms were used for episode construction beginning with an index asthma diagnosis and ending with a final clinical event, yielding a sample of 30,553 episodes. Only service claims with an asthma diagnosis were assigned to an episode. We used a database of private insurance claims from 1992 to 1993. Disease staging served as the framework for evaluating episodes with similar severity and resource use. We found that episodes of care can be constructed from claims data and have the potential for use in physician profiling and as quality screens. Certain limitations in using this methodology suggest that caution needs to be exercised in applying this approach to evaluation of health care services.