What does the term “bundled payment” mean in healthcare?

Bundled payment is a reimbursement approach in healthcare where a single payment is made to cover multiple related services provided during a specific episode of care. This method encourages efficiency and cost-effectiveness by consolidating the payment for various treatments or procedures, often related to a particular patient condition or treatment plan, into one sum. This means that instead of billing for each individual service separately, which can lead to higher costs and administrative burdens, healthcare providers receive one comprehensive payment that encompasses the total cost for a defined set of services.

This approach not only simplifies the billing process but also incentivizes providers to deliver high-quality care while managing costs effectively, as they have to ensure that all necessary services are included within the payment received. Bundled payments are increasingly being implemented in value-based care models, promoting better coordination among providers and improved patient outcomes.