What Is Bundled Payment?
Bundled payment, also called episode-based payment, provides a single payment for all services related to a clinical episode, such as a hip replacement, rather than paying separately for each provider and service. This model encourages coordination among providers to control costs while maintaining quality.
BPCI Advanced
The Bundled Payments for Care Improvement Advanced (BPCI Advanced) model is a voluntary CMS initiative covering numerous clinical episodes. Participants receive a target price for an episode, and actual spending is reconciled against that target, with providers sharing in savings or losses.
Comprehensive Care for Joint Replacement (CJR)
The CJR model is a mandatory bundled payment program in certain geographic areas focused specifically on hip and knee replacement episodes. It holds hospitals financially accountable for the cost and quality of care from surgery through 90 days post-discharge.
Risk Sharing and Gainsharing
Bundled payment models involve two-sided risk: providers can earn savings if costs come in under the target price but must repay a portion of costs that exceed the target. Gainsharing allows hospitals to share savings with participating physicians as an incentive to reduce unnecessary utilization, subject to fraud and abuse law safeguards.
Cost Accounting Implications
Bundled payments require sophisticated cost accounting to track spending across multiple providers and settings for a single episode. HIM professionals contribute by ensuring accurate coding of the episode's index event and all related post-acute services.
Exam Tip
Understand that bundled payments differ from fee-for-service because they create shared financial accountability across the entire episode rather than paying each service independently.