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Three Ways Bundled Payments Can Be a Success

May 15, 2018

Bundled payment models continue to attract interest for their potential benefits over traditional fee-for-service payment models. With bundled payments, also known as episode-based payments or packaged pricing, a group of providers is reimbursed based on a contracted price to cover all of the care and services related to a particular episode of patient care. One example of an episode of care would be with a patient who undergoes surgery for a knee replacement and has no complications. Depending on the model used, the episode may be defined as beginning when the patient is admitted to the hospital for the surgery and ending 90 days after hospital discharge, and all related care, from pre-op to rehab, would be bundled together for pricing purposes.

The bundled payment model has many upsides, from lowering healthcare expenditures to improving patient care and coordination across teams. These models can provide more efficient care to the patient by streamlining protocols, and patients as consumers will appreciate an increased level of transparency with pricing. However, there are potential downsides, too. For example, it can be challenging to draw the boundaries around the definition of an episode of care. There are also concerns that these payment models may stifle innovation or disincentivize referrals for specialty care.

There are three ways bundled payments models can be successful: communication, communication, communication. Reality is more complicated than that, but the basic idea holds up that bundled payment models incentivize collaboration. Clearly patient care and healthcare reimbursement reflect a complex landscape with multiple competing factors, and defining success can be as difficult as defining a discrete episode of care. But some basic tenets hold true, and at their foundation these bundled payment models rely on interdisciplinary teamwork and feedback from all stakeholders.

Communication Between Payers and Providers

The negotiation of the contracted price per episode of care is critically important. Members of the healthcare team will want to advocate for their patients and ensure they will be able to exercise clinical judgment to the full extent of their licenses. Payers and providers will be sharing risks and rewards with these systems, and feedback needs to go both ways.

Increased Partnership across Teams

Providers will no longer be paid for the piecemeal accumulation of services, and will share risk and reward with their colleagues across teams. This payment structure should help to foster teamwork and communication, because everyone will bear the burden of a readmission. Who took care of the patient before you? Who will take care of the patient after you? Is everyone on the same page to provide the patient the quality of care they need?

Data Analytics

Analytics were important before, but they are even more important when switching models of care for reimbursement. How does your performance with bundled payment models stack up against your performance with other models? What new points of pain materialize and need to be addressed, and what lessons can be learned from improvements?

Healthcare reimbursement can be an uncertain business, but there are some certainties: processes will always evolve, and there will always be a need to strive for quality improvement.