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HCI3 Improving Incentives Issue Brief: Bundled Payment Across the U.S. Today

Status of Implementations and Operational Findings

Authors: Michael W. Painter, JD, MD; Megan E. Burns, MPP ; Michael H. Bailit, MBA;

Keywords: Bundled Payment, Pay for Performance, PROMETHEUS Payment,

Health policy discussion across the United States during the past few years has placed significant attention on the adverse effects of fee-for-service payment, the predominant method of paying for health care services in the country. Feefor- service payment has been widely criticized for financially motivating providers to focus on increasing volume of services and thereby contributing to the nation’s high rate of health care cost growth. Fee-for-service payment has also been faulted for contributing to fragmented and sometimes harmful care.

Bundled payment is one alternative to fee-forservice payment. A bundled payment is a fixed dollar amount that covers a set of services, defined as an episode of care, for a defined time period. The fixed dollar amount can be used to cover two different types of bundles:

1) professional and facility charges for a discrete episode of acute care over a defined time period, and

2) professional and facility charges for treatment of a chronic condition over a defined time period.

Analysis of Medicare claims data has suggested that considerable savings could result from the widespread implementation of bundled payments1. Limited early results from selected initiatives analyzed in this report also show savings coupled with improvements in the quality of care. Interviewees in some cases pointed to reductions in lengths of stay and readmissions. These savings and improvements in care suggest there is value in a continued focus on bundled payments as an alternative to fee-for-service payment... Full Text Below.

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HCI-IssueBrief-4-2012.pdf2.74 MB