Bundled and Episode-Based Payment Models

Bundled payment programs generally provide a single, comprehensive payment that covers all of the services involved in a patient's episode of care.

Traditionally, Medicare has made separate payments to providers for each of the individual services they furnish to beneficiaries for a certain illness or course of treatment. However, policymakers and providers have become increasingly concerned that this approach may result in fragmented care coordination across providers and health care settings.

Bundled payments can align incentives for providers – hospitals, post-acute care providers, physicians, and other practitioners – and encourage them to work together to improve the quality and coordination of care. Generally, bundles cover a set of services for certain conditions or procedures to include hospitalization and a certain time period post discharge.

They are often viewed as somewhat of a 'middle ground' between traditional fee-for-service payments, which entail very little financial risk for providers, and full capitation, in which a provider assumes almost full financial risk.

Some examples of bundled payment models include:

Bundled Payment for Care Improvement (BPCI) Advanced

Launched in 2018, BCPI-A builds on previous iterations of the BCPI program. This model provides a single, flat payment for a group of services tied to a clinical episode (as identified by an anchor stay hospitalization or anchor outpatient procedure and related services for 90 days following). Clinical episodes cover a variety of chronic conditions and procedures aligned in 8 groups (including cardiac, GI, neurological, orthopedic, and medical/pulmonary). Payments are reconciled against target prices and quality metric performance. The model is scheduled to end in 2025.
Comprehensive Care for Joint Replacement (CJR)

This model was established in 2016, focusing on hip, knee and ankle replacements. It covers index hospitalizations or outpatient procedures and related services for 90 days. Target prices are set at the start of a performance year, with payments are reconciled against that price annually. The model is scheduled to end in 2024.
Transforming Episode Accountability Model (TEAM)

TEAM is a new mandatory payment model for that will bundle payment to acute care hospitals for five types of surgical episodes. It applies to inpatient PPS hospitals in 188 core-based statistical areas. TEAM expands upon previous episode-based payment models like the Comprehensive Care for Joint Replacement (CJR) and the Bundled Payments for Care Improvement Advanced (BPCI-A) models. TEAM will have a five-year model performance period, beginning Jan. 1, 2026, and ending Dec. 31, 2030.

Key resources

Comment Letter in Response to Future of Episode Based Care RFI — AHA provides feedback on CMS' Episode Based Payment request for information.

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