Bundled Payments
Bundled payments—which link payments for the multiple services beneficiaries receive during an episode of care—are intended to align reimbursement with the health care triple aim of improving the experience of care, improving population health, and reducing total costs of care. But they may also lead to unintended consequences, including the underutilization of necessary services.
What are bundled payment models?
Bundled payments are value-based payment models used to maintain health care quality while reducing costs and increasing efficiency. In a bundled payment, health care providers are reimbursed based on the expected costs for specific episodes of patient care. This differs from fee-for-service retrospective reimbursement, in which providers are paid for each service they provide to a patient, and capitation, in which providers are paid a lump sum per patient regardless of the number of services the patient receives. However, whether bundled payments can help health systems achieve cost-effective, quality service through coordinated care is still uncertain.
Bundled payments are more than simply grouping together commonly associated services. The goal of bundled payments is to provide a better level of care for patients by creating a structure that recognizes physicians as the clinical leaders and keeps physician risk manageable by paying for the value of care rather than the volume of care.
At its core, a bundled payment is reimbursement for clinically defined episodes of care. These episodes of care can be simple, like a stress test administered by a single provider, or complex, like a one-year payment for cancer treatment that includes multiple providers and settings of care.
Designing Successful Bundled Payment Initiatives
Despite having the potential to lower costs and improve health care quality, bundled payment models may also lead to unintended consequences, including underutilization of needed, but costly services or avoiding caring for the sickest patients. To improve bundled payments and reduce potential risks associated with the model, NPC conducted a study that identified key success factors for bundled payment programs:
- Begin with mostly homogeneous patient populations and well-defined quality metrics and expand to other areas as better risk adjustment and quality metrics become available;
- Put protections in place to safeguard patient access
- Emphasize aligning physician incentives with the patients’ best interest.
Opportunities to Advance Bundled Payment Models
Given the pros and cons associated with bundled payment arrangements, it is important that policy proposals that rely on bundled payment models are thoroughly examined to minimize unintended consequences. This is particularly true when examining prospective payments for innovative curative therapies and other single administration products. For example, in public comments to the Centers for Medicare and Medicaid Services (CMS), NPC acknowledged the unique challenges these therapies pose for health care payers and encouraged US regulatory bodies to continue supporting further innovation across the health care landscape.