Medicare Payment Bundling: Insights from Claims Data and Policy Implications
Analyses of Episode-based Payment

October 2012

There has been a growing interest over the past several years in the concept of payment bundling, whereby services for physicians, hospitals, post-acute care providers and others would be "bundled" together into a single payment covering an episode of care over a specified period of time. In order to implement a bundled payment system in the Medicare program, a series of operational issues need to be considered by policymakers and providers regarding how the episode of care would be defined, how the bundled payment would be priced and how care that is delivered under the bundled payment would be managed.

The American Hospital Association (AHA) and the AAMC (Association of American Medical Colleges) commissioned Dobson DaVanzo & Associates, LLC (Dobson | DaVanzo) to conduct a series of quantitative analyses of different episode-based payment bundles. The purpose of this issue brief and report is to highlight considerations for policymakers and providers based on descriptive statistics and multivariate regression analyses, supplemented with findings from the literature and select interviews.