Summary: MedPAC proposes a bundled payment for services rendered by a single entity,
defined as a hospital and its affiliated physicians. The payment will cover costs associated with
an episode of hospitalization. The commission recommends a phased-in approach: in phase
one, hospitals and physicians will be confidentially informed of their utilization patterns for
hospitalization episodes. In the second phase, occurring two years after the first, the
confidential information will be made publicly available. In phase three, the bundled payment
system will be implemented. The commission also recommends that Medicare reduces
payment to hospitals with high readmission rates.
5. Miller, H. D. (2008) From Concept to Reality: Implementing Fundamental Reforms in Health
Care Payment Systems to Support Value-Driven Health Care. Issues for Discussion and
Resolution at the 2008 NRHI Healthcare Payment Reform Summit. Retrieved from:
Summary: This framing paper prepared for the 2008 Network for Regional Healthcare
Improvement (NHRI) Summit on Healthcare Payment Reform describes key issues and options
for advancing payment reform in the U.S. The paper proposes episode-of-care payments as a
middle ground between fee-for-service and capitation model of payment. One of the issues
covered by the framing paper is the type of provider structures needed for bundled payments.
According to the author, an integrated delivery system (IDS) is well-positioned to be such an
entity. Outside of an IDS, a special organizational entity that includes a physician group and a
hospital could also receive the bundled payment on behalf of all providers involved in an
episode of care.
6. Congressional Budget Office (2008) Budget Options Volume 1: Health Care. Retrieved from:
Summary: This proposal advocates for bundled payments for acute and post-acute care
provided in both the hospital and non-hospital setting within 30 days of patient discharge. The
bundled payment rate would be equal to the amount paid for the MS-DRG plus post-acute cost
associated with that MS-DRG. According to the proposal, hospitals would have a greater
involvement in the patient’s post-discharge care and would probably reduce post-acute care
under this payment approach. An alternative approach proposed by the CBO is bundling
payment for hospital and physician services.
7. The Commonwealth Fund (2007) Bending the Curve: Options for Achieving Savings and
Improving Value in U.S. Health Spending. Retrieved from :
Summary: The Commonwealth Fund Commission on a High Performance Health System
proposes bundling payments for hospitalizations for acute-care episodes. Under this approach,
Medicare would bundle payments for all inpatient, physician, and related services provided from
the time of admission within 90 days post-hospitalization. The approach would also be applied
to healthy and chronically ill patients in the outpatient setting.