Bundled Payment Arrangements
Bundled Services provide a fixed payment for all services provided during a single episode of care. This payment is distributed among all providers in a health care system involved with the patient. The included services can be different depending on how the provider treats the patient. Ex: Cardiovascular care most common.
Payment Calculation: Providers (e.g., hospitals, physician groups, etc.) participating in bundled payments agree with payers on a target price for select clinical conditions, typically adjusted for episode severity. To set a target price, payers often look at overall variation and mean pricing in historical payments for all facets of an episode of care to establish a case rate. Payers then enter into negotiations with providers to set a target bundled price, sometimes 1–2% below the case rate or below projected spending growth.
Benefit: Under this model, a participating provider is incentivized to provide efficient care, reducing the number and cost of services contained in the bundle.
Capitation Payment Arrangements
Capitation means that providers are paid a monthly amount per beneficiary for all services. This arrangement agrees to fixed costs for services available to a specific group of patients. Used mainly with HMOs, Medicaid and Medicaid Advantage Plans
Payment Calculation: A payer enters a one-year capitation contract with a healthcare provider to secure coverage for its members. The healthcare provider would be paid a fixed amount to provide care services for all of the insurer's members, say 3,000 of them. Typically services such as:
- Preventive, diagnostic, and treatment services.
- Injections, immunizations, and medications administered in the office.
- Outpatient laboratory tests done either in the office or at a designated laboratory.
- Health education and counseling services performed in the office.
Benefit: Payers can predict the healthcare costs for their members since the amount of healthcare services each patient should receive is determined beforehand. Payers can also use capitation models to increase patient satisfaction.
