hospitals or academic medical centers. Therefore, their design and results are not necessarily
generalizable on a wide scale and to small, medium-sized, and rural hospitals. Also, as shown
in the summary chart in the Appendix, the major bundled payment programs implemented do
not address key gaps in the design of bundled payment. The chart summarizes the publicly-available published data on components of the programs such as, the conditions of focus, the
providers and services involved in the bundled, strategy for holding providers accountable for
care provided, timeframe for the bundled payment, organizational capabilities of the entity
receiving the payment, and how payments were determined and adjusted.
Box 1 – Sample Bundled Payment Programs
Medicare’s Participating Heart Bypass Center Demonstration: Under this demonstration,
which ran from 1991 to 1996, seven hospitals received a single payment covering hospital and
physician services for coronary artery bypass graft (CABG) surgery. The participating hospitals
received a single payment and determined how they would share the amount with physicians.
The payment rate was also updated based on the Medicare hospital prospective payment and
physician fee schedule rates.
Medicare’s Cataract Surgery Alternate Payment Demonstration: From 1993 to 1996, this
demonstration project used a negotiated bundled payment option for all services routinely
provided within an episode of outpatient cataract surgery, including physician and facility fees,
intraocular lens costs, and the costs of selected pre- and postoperative tests and visits.
Payment rates were determined by competitive bidding and were 2 to 5 percent lower than the
non-demonstration payment rates.
Geisinger Health System’s ProvenCare: Under this program, which began in 2006, payment
is bundled for all non-emergency coronary artery bypass graft (CABG) procedures including the
preoperative evaluation, all hospital and professional fees, and management of any
complications (including readmissions) occurring within 90 days of the procedure.
Dr. Johnson and Ingham Medical Center: In 1987, an orthopedic surgeon partnered with a
local hospital to offer a fixed price for knee and shoulder arthroscopic surgery, which included all
related physician and hospital charges for surgery and any subsequent service for two years
after surgery.
Medicare’s Acute Care Episode Demonstration: Beginning in 2009, Medicare pays the five
participants a flat fee to cover hospital and physician services for cardiac care (CABG, valves,
defibrillators, pacemakers, etc.) and orthopedic care (hip and knee replacement). The
participating sites have the discretion to reward clinicians and other hospital staff who meet
certain quality and efficiency goals.
PROMETHEUS Payment, Inc.: With grants from the Commonwealth Fund and the Robert
Wood Johnson Foundation, PROMETHEUS is developing a bundled payment system to cover
a full episode of care for acute myocardial infarction, hip and knee replacements, CABG,
coronary revascularization, bariatric surgery, and hernias. PROMETHEUS was implemented in
three sites in 2009.
