Growing in popularity, 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.
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.