What is bundled payment?
Bundled payment is a healthcare reimbursement method in which providers, including hospitals and physicians, are paid a single, consolidated amount for all services related to a specific treatment or episode of care. This payment model covers the entire care cycle, from initial consultation through post-treatment follow-up, encouraging coordinated and efficient care while controlling costs. The fixed payment is determined based on expected costs and clinical guidelines for the particular episode, aiming to improve quality and outcomes by promoting better resource utilization and reducing unnecessary services.
What is the difference between fee-for-service payments and bundled payments?
Bundled payments and fee-for-service payments represent two distinct healthcare reimbursement models. In a bundled payment system, providers receive a comprehensive payment to cover all services related to a specific treatment or condition over a defined period, encouraging coordinated and cost-efficient care.
On the other hand, the fee-for-service model reimburses providers separately for each service or procedure performed, which can incentivize higher service volumes and potentially lead to overtreatment without necessarily improving patient outcomes.
Bundled payments aim to enhance care quality and reduce unnecessary costs, whereas fee-for-service focuses on the quantity of services rendered.
Examples of bundled payments
Joint replacement surgery
Medicare's Comprehensive Care for Joint Replacement (CJR) model bundles payments for hip and knee replacement surgeries. The payment covers all services related to the procedure, including preoperative consultations, surgery, and postoperative care, such as rehabilitation and follow-up visits. This model encourages hospitals and providers to coordinate care and manage costs effectively, as they are financially responsible for complications or readmissions.
Cardiac care
The Bundled Payments for Care Improvement (BPCI) initiative includes a bundle for heart attack care. The payment covers all services from the initial hospitalization through follow-up care and cardiac rehabilitation. Providers are incentivized to manage the entire episode of care efficiently, aiming to improve patient outcomes and reduce overall costs.
Diabetes management
Some healthcare systems use bundled payments to manage chronic conditions like diabetes. The payment covers all services related to diabetes management over a year, including office visits, laboratory tests, medications, and diabetes education. This encourages comprehensive care and better management of the condition, aiming to reduce complications and overall costs.