Bundled Payments

There are a number of developments occurring to implement national healthcare and central to the remittance scheme is bundled payments. Other names for bundled payments are; episode based payments; evidence based case rate, global bundled payments and package pricing. I like bundled payments.

Many healthcare reformers believe that the solution to the “fee for service” model, which rewards physicians for performing activities or services, is to “bundle” payments around a particular health problem. This is not a new idea. Medicare proposed and implemented a demonstration project to bundle payments for heart bypass surgery in 1990. That project showed that bundled payments could work well (for heart by-pass surgery). The benefits were to reduce costs, patients had better survival rates, and shorter hospital stays were part of the results.

So, why hasn’t there been a wider acceptance of these ideas, and adoption of the concept across a number of other specialties? There are reasons, but the largest one is to determine how the bundled payment will be divided in a fair and equitable manor among the multiple providers for a single episode of service. The second reason is the difficulty of “standardizing” an episode of service.

Think of this, the grocery store where you shop is paid $150 for each full buggy (a patient’s episode of services). Each item in the buggy represents a healthcare service or activity by a provider. The grocery store receives the bundled payment and now must divide the $150 and pay it to each provider of service.

Do you think that there will be a few broken eggs and a lot of spilled milk!

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