Q&A: Understanding bundled payments

Q: What are bundled payments and who benefits from them?

A: Bundled payments pay multiple providers for coordinating the total amount of services required for a single, predefined episode of care. The Bundled Payments for Care Improvement (BPCI) initiative was set up to standardize costs across surgeries and care processes over the transitions of care. Under the BPCI, if a client had hip replacement surgery, the payer(s) would traditionally reimburse each provider for the costs of their treatment (e.g., the hospital, surgeon, anesthesiologist). With bundled payments, the payer collectively reimburses the providers involved, using a set price for the episode of care that is based on historical costs.

Now, bundles can get pricey for providers and their organizations, especially when pre-arranged reimbursement per episode is exceeded. They were implemented over two phases, and there were four different types of models, but I won’t subject you to a trek back through the weeds. You can hit the URL in the chapter resource list for that deeper dive into the BPCI program.

Who bears the financial responsibility for overages? If the cost of the care episode comes out to less than the bundled payment price defined, then the providers are able to keep the difference. However, if the cost is more, all participating parties lose the difference. Many case managers have been subjected to specific “bundle rounds” or initiation of “bundle client alerts” streaming through their EHR system.

For more information, see The Essential Guide to Interprofessional Ethics in Healthcare Case Management.