What are Bundled Payments and What Opportunities do They Provide?

What are Bundled Payments?

For those who are unfamiliar with the topic, in simplified terms, bundled payments mean that providers are paid in a bundle for a specific episode of care instead of paying for each individual service. An example of this is that currently if you went to the doctor for a knee replacement, your insurance provider would pay for the doctor’s visit, the surgery, the hospital stay, the physical therapy, etc. individually. Under bundled payments, the provider receives a lump sum and must allocate funds appropriately.

In bundled payment programs, there are many moving pieces that impact whether or not a provider will see profit or losses for the services they provide to patients. The primary public popular bundled programs currently utilized across America is the Bundled Payment for Care Improvement Program (BPCI), and BPCI Advanced later this year.

Opportunities for Enhanced Collaboration

Providers who are a part of bundled payment programs have an immense opportunity to increase revenue by improving care coordination, utilizing cost-effective services, and ensuring care is delivered appropriately in a timely manner that benefits the patient and his or her preferences. While this is easier said than done, there is one particularly interesting opportunity under bundled payments – increased collaboration with downstream post-acute providers.

By bundling payment for services under an episode, providers are more incentivized to work together to coordinate and reduce the costs of care. When patients move from home to the physician’s office to the hospital to the post-acute provider back home to recover there are many opportunities to ensure patients are receiving the right care at the right time from the right provider. There are distinct advantages with understanding what type of care is most applicable to an individual patient.

With incentives to deliver personalized care, providers are taking advantage of many opportunities to choose care options that best suit the individual patient. For example, in the same knee replacement scenario we brought up earlier, in a fee for service model, the hospital is more incentivized to choose a more expensive procedure and cheaper implant. Under bundled payments, the hospital is incentivized to choose a replacement not based on cost, but based on the outcome.

Creating Alignment Between Acute and Post-Acute Care Providers
Bundled payment programs also provide opportunities to explore new care plans and regulations. Because providers are more aligned on goals, many old standards of care are being questioned. One example is the utilization of the SNF three-day waiver. Under fee for service, patients are required to spend at least three days in the hospital (3 PPDs) before they are eligible to go to a skilled nursing facility (SNF). However, it may be more cost effective to transfer the patient to a skilled nursing facility after fewer than three days. Under bundled payment models like CJR, patients can be admitted to a skilled nursing facility even if they do not spend three days in an acute care hospital. This is oftentimes a better and much cheaper care setting for recovery.

Overall, bundled payments provide an opportunity to be innovative in care processes and directly incentivizes the sharing of information to better coordinate care. As alternative payment models with shared risk become the norm, understanding the intricacies and successful aspects of these programs will prove crucial for payers, providers, policymakers, and ultimately patients.

If you are looking to understand more strategies to maximize your bundled payment reimbursements, contact us today for a free consultation.


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