Bundled payments: What healthcare leaders need to know

Despite mixed results, Medicare is betting big on bundled payment initiatives. And that means healthcare leaders must fully understand the payment model.

First, writes healthcare policy expert Paul Keckley, Ph.D., in Hospitals & Health Networks, the model is a major piece of Medicare cost containment plans. The initiatives will allow the Centers for Medicare & Medicaid Services to coordinate care at low financial risk and gives the agency a clearer picture of variations in costs and care use in different regions of the country.

Moreover, going forward, the model will create more incentives for healthcare providers to improve care quality, according to a Health Affairs blog post. This is demonstrated by systems such as UCLA Health, which maintains one of the longest-lasting bundled payment programs for kidney transplants. Like most bundled programs, it ties reimbursement to quality, and according to the post, it has among the best survival rates for grafts nationwide, which many experts credit to its close monitoring of outcomes.

The shared risk fits into the care coordination benefits as well, according to the blog post; when physicians share risk across specialties, they have a vested interest in one another's outcomes and care quality. Moreover, the UCLA program has been a pioneer in making care more efficient through redesign strategies that chart care pathways and standardize care throughout the system. Within UCLA's bundled care program, these strategies have cut delayed graft function rates in half and slashed lengths of stay from 17 to seven days, according to Health Affairs.

The bundled payment model also means hospitals must create tight-knit networks involving post-acute collaborators and doctors; shared-risk arrangements under the bundled models are high-risk propositions unless care coordination, clinical protocols and information systems all align across the continuum of care, Keckley writes.

However, bundled payments will also create an additional administrative burden. Despite 30 years of experience with bundled payments,  UCLA still finds it creates administrative challenges, according to the Health Affairs post.