C-Suite Cheat Sheet: Bundled Payments

Educational Briefing for Suppliers and Service Providers

Executive Summary

Under a bundled payments model, a payer issues a lump sum, or a “bundled” payment, to the providers involved in delivering an episode of care during a specific time period, which may include physicians, hospitals, and post-acute care providers. Because a bundled payment is smaller than the sum of individual payments to providers, providers can succeed only by reducing input costs and delivering a more efficient episode of care.

Medicare’s optional Bundled Payment for Care Improvement (BPCI) Initiative, which aims to increase coordination among providers treating Medicare beneficiaries, is the most prominent bundled payment program nationwide. Medicare’s first mandatory bundled payment program, Comprehensive Care for Joint Replacement (CJR), began April 1, 2016. Providers have also partnered with commercial payers or employers in similar bundled payment programs. CMS proposed new mandatory hip fracture and cardiac bundled payment models for 2018, but those programs were canceled in November 2017. CMS is evaluating voluntary bundled payment programs in the future.

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