Define expectations for bundled payment initiatives

By Brian Eastwood

Elaine Daniels, senior strategic contract consultant with Blue Cross and Blue Shield of North Carolina, says BCBSNC defines a bundled payment as one based on a specific episode of care, with a "care team" responsible for the care managed within that episode.

Thomas Aubel, director of medical payment strategy and policy for the University of Pittsburgh Medical Center (UPMC), says the episode of care itself must have a clear beginning and an end.

To illustrate the core concepts behind bundled payment initiatives, it helps to look at them in the context of the two episodes of care most commonly covered by bundled payments: Knee and hip replacements.

  • They are common. According to the Centers for Disease Control and Prevention, physicians perform more than 1 million hip and knee replacements annually. Procedures with that type of volume are good candidates for bundled payments, as one bad case won't "blow the bundle," Aubel says.
  • They generate information. High volume begets big data. Daniels says sharing claims data with providers shows them the average cost of an episode of care and helps them identify ways to "whittle down on unnecessary costs" due to waste, leakage or otherwise unnecessary services.
  • They are elective. Because patients choose to undergo these procedures, as well as the ensuing therapies, they have an incentive to comparison shop, Daniels says--and a Blue Cross and Blue Shield price transparency tool found "extreme" differences in the total cost of knee and hip procedures. Payers and providers, meanwhile, have an incentive to offer a procedure at the lowest cost to patients while maintaining high marks for quality.
Define expectations for bundled payment initiatives