Bundled Payments: What Are They Good For?

In the relatively new bundled payments system, providers are given one payment for each "episode of care" provided. In the past providers would be provided payment based on a fee-for-service system. In this system, all items were billed for separately, including things such as supplies, anesthesiology, and ancillary services. The first thing most would probably wonder is why move to such a system? To uncover this you must look at some of the advantages and disadvantages.

The first advantage, which could be argued is the primary reason for moving to the bundled payment system, is that it saves money by saving on resources. This works because when the provider knows they will only be getting one payment regardless of how many services they provide then it forces them to lock down on their budget. For example, a provider billing under the bundled payment system may realize they only need to do one MRI rather than the three they would have performed under a fee-for-service system.

The second major advantage of the bundled payment system is that it encourages providers to increase their quality of care. With the providers knowing their payments are based on the outcomes of these "episodes of care", more of an incentive arises to provide better care. Compared to the fee-for-service system, providers would more likely be concerned with providing care to more patients rather than the quality of care because they can bill more. With bundled payments, there is a clear shift from quantity to quality.

While the new system brings some great advantages, there are a couple of disadvantages worth mentioning. The first is that it could be a lot to take on as far as getting the infrastructure and technology in line to carry it out. This would be especially true for a smaller institution lacking the necessary resources. The other disadvantage is concerning splitting up the payments. As we know there is one single payment, and so this must be distributed among the providers involved. Coming up with a system to accurately measure contribution while being fair could present an issue.

All in all, the bundled payment system is something that was needed in the healthcare system. As prices continue to swirl out of control, strategic approaches such as this must be taken. Although there may be some minor struggles in implementing this strategy, it will certainly continue to provide benefits concerning the cost and quality of healthcare.


References

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Marketing, B. H. M. “6 CMS Bundled Payments of Care Improvement Innovations Under the ACA.” BHM Healthcare Solutions, 22 Oct. 2013, http://bhmpc.com/2013/10/6-cms-bundled-payments-of-care-improvement-innovations-under-the-aca/.

“The Pros and Cons of Bundled Payments.” CarpeVita Inc. | Integrated Health Networks for Wellness, 1 Sept. 2015, http://carpevitainc.com/the-pros-and-cons-of-bundled-payments/.