Bundle Payment Model

With the increasing cost of medical care, the US health system have been working tirelessly to find ways to reduce the cost and at the same time improve quality of care. Current US medical payment methods have continue to fail to support the system, which is apparent through the cost of care. For so many years the most dominant method for physician payment in the US is the fee-for-service method. In this method, payers reimburse for all services; meaning payment is based on the quantity of care and not the quality of care. Policy makers are aware that the US healthcare system can't survive on this method, as a result new payment reforms have been developed throughout the year. In this paper, I will explore the history of Bundle Payment for Care improvement models, the impact it can make on physician payment and its effects on health care spending in the US health system. The paper will focus on the 4 models and its potential to reduce Medicare spending. I will bring to light the episode of care, services included in the bundle and payment methods. History Bundled payment, also known as episode-based payment was developed by the Center of Medicare and Medicaid Innovation Center (CMS.gov, 2014). It's potential to control cost, integrate the delivery system and restructure the delivery of primary care has made it one of the top payments system of this era. The purpose of the system is to link payments for multiple beneficiaries during episode of care instead of paying for services separately. In addition, the program is structured to improve coordination, quality, and efficiency of services around a hospitalization in connection with one or more of eight conditions (American Hospital Association, 2010). In order to do so, an organization's data must first be analyzed during the episode of care. An episode of care is required to have a specific event such as; an inpatient hospitalization, physician and post discharge services, and related admission services. The episodes have their own different distribution costs which is determined by service type. They are defined by the condition that the payer is responsible for, for the scope of services and the duration of the episode. "Understanding where the cost are concentrated is vital, because it helps identify where cost reduction opportunities are likely to be found and where partnerships with other providers or specific types of interventions may be important" (American Hospital Association, 2013). Unlike the fee-for-service system, in a bundled payment, a single entity is responsible for managing the cost care that occurs in the episode. The system allows for single entity to take charge of the cost of care within the episode to prevent total costs from exceeding the set price. According to research, there are nine performance dimensions measured by bundle payments (Rand corporation). Bundle payments has the …show more content…
Compared to the fee-for-service system where each provider who treat a patient across an episode of care is paid separately, which takes efforts, resources and time, leading to miss management. Bundle payments will do just the opposite, instead of paying individually, a fixed payment amount will be paid to providers. In this system everyone benefits, if everyone works together to improve quality and efficiency, they get a share in the savings. Incentives such as this will drive providers to want to collaborate and provide better quality of care. Other beneficiaries in the systems are patients and even insurers. It will help bring down cost for insurers and even employers. Since the payment is fixed rate, providers cannot bill extra for additional cost. Bundle payment encourages providers to take on financial responsibilities for outcomes, which will result in them using resources wisely because there is incentive involved in saving resources. Also because it's a fix payment amount, providers will not be given additional payment for unneeded or extra treatment. Not only will the bundle payment help improve quality of care, it will also have tremendous impact on cutting cost of care which is one the most significant aspect of why I believe this payment model is a good system. Risk involved in participating in bundle payments are; financial risk, and operational risk. These risk can be eliminated when incentives are aligned with well integrated process. Implementation of bundle payment will prove to be the best system in improving care, reducing cost and coordinating