What does the term "bundled payment" mean?

"Bundled payment" refers to a single fee that encompasses a comprehensive set of services related to a specific treatment or condition. This approach consolidates multiple services—such as hospital stays, surgical procedures, follow-up visits, and any necessary diagnostics—into one combined payment. The goal of bundled payments is to encourage providers to deliver efficient and coordinated care while minimizing unnecessary services and costs.

This payment model differs significantly from paying for individual services, which would not promote the integrated care that bundled payments aim for. Additionally, bundled payments help address the unpredictability regarding costs associated with various services and treatments, which can be addressed in a bundled approach rather than through separate payments for unbundled services. By focusing on overall treatment rather than individual components, bundled payments encourage value-based care and better health outcomes for patients.