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Can alternate payment methods provide practical solutions to improving the quality of healthcare? I would like to focus on one of the more accepted forms of the Alternate Payment Method, a bundled payment which is geared toward value-based care. The goal is to incentivize all providers participating in the patients care to coordinate the most effective and cost efficient course of treatment. With bundled payments, the total amount paid out for all related expenses to the episode of care are at a predetermined fixed, lump-sum payment and then divided among the participating providers. Additional costs above the fixed rate or potential savings is shared among the involved providers. For example, a patient with diabetes is admitted to the hospital for a cardiac cath procedure. The cardiologist would coordinate with the endocrinologist, the hospitalist, and wound care to ensure his diabetes is managed and his wound is properly healing thus preventing errors that could lead to complications or extend his length of stay. Both of which will increase the cost of this episode of care. Because the lump-sum payment must cover all related expenses to the episode of care it motivates the providers to coordinate the most efficient plan of care. Currently the fee-for-service model pays each provider individually for the same episode of care and promotes overutilization for unnecessary tests and procedures thereby leading to a fragmented treatment plan for the patient. Bundled payments should not be confused with global payments or “capitation” where the lump-sum payment is attributed to the patient not the specific episode..
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