Bundled payment

As the healthcare system is extensive and complex, it presents opportunities for different business models to emerge. The possibilities include, emergence of niche providers, patient activation, innovations enabling process automation, shift from resource utilization to final outcomes, reconfiguration for accountability, new technologies such as electronic medical records, bundled payments, new medical devices that necessitate process reengineering, and government vs. private ownership of services and/or payments. 

Under Bundle payment, the possible payments may look as follows severity-adjusted payment of 61,000 for the hospital and 13,000 for the surgeon/ physician. In addition, there would be 15,300 allowance for PAC. The total payment would be 89,300. Compared to fee-for-service, the cost to the payer is reduced by 12,200. If we assume a base payment of 50,000 for surgery and 10,000 for diabetes, we would have x = 101, 500 and y = 60, 000, so that... 

By preventing readmission the hospital and surgeon/physician are paid 76,500 under fee-for-service, whereas, the bundle payment stays at 89,300. Thus, the providers are paid 12,800 more under bundle payment and it is the bonus for preventing readmission for infection treatment. 

Comprehensive care payment is a single payment (Uke bundled payment) for all of the healthcare services needed by an individual for a fixed period of time. The amount of the payment is adjusted based on the type and severity of the conditions the patient has, and on the quahty of care delivered. If the cost of care goes up, the excess cost is divided into two parts risk factors such as aging population, and increase in procedures (higher proportion of b3q>ass surgery for mild coronary blockage). The ACO would be accountable for the latter, but not the former. While simplifications in billing and payments for ACOs and payers are permitted, the ACO would need to provide additional information on patient conditions to support severity and risk adjustments. 

A payment scheme is a mechanism used to transfer funds from the payers to the providers. It can have a significant effect on how health care resources are allocated and services delivered. A well designed scheme facilitates access to health services and ensures high quality care, while promoting efficient use of resources at low cost. Therefore, it accomplishes far more than just funds transfer. As outlined in Langenbrunner et al. (2009), the methods of payment include fee-for-service (FFS), capitation, per diem, case based as in bundled payment, and pay-for-performance (P4P). 

As discussed earlier, a bundled payment provides a single payment for an entire episode of care during a set period (treatment for a specific medical condition). Implementation of bundled payment includes, bundle constmction and pricing, billing and payment distribution, care redesign, and quality monitoring (Mitre Corp 2012). 

Care redesign is a primary objective of bundled payment. IT capabilities may prove useful for process support and data access, communications, and analytics. The use of electronic health records may also prove beneficial to support robust care redesign. Quality monitoring activities benefit from IT-supported analysis of data from many sources. 

Payment structure Multiple pricing schemes — fee fm stavice (FFS), bundled payment, capitation, resource utilization, pay fm performance (P4P)... 

DHCFP. (2011). DHCFP report on bundled payments, Vol. 1. Massachusetts Division of Health Care Finance and Policy, http //www.mass.gov/dhcfp... 

McKessrai. (2010). Position paper Bundled payment. McKesson Health Solutions. http //www. mckesson.eom/static files/McKessraLcran/MHS/Docnmenls/Issue-Paper-Bimdled-Paymenl0210. pdf... 

Mitre Corp. (2012). Information technology for bundled payment, http //www.ahcancal.org/facil ity operations/hit/Documents/IT Bundled Payment.pdf Mosa, M., Yoo, I., Sheets, L. (2012). A systematic review of healthcare applications for smartphones. In BMC medical informatics and decision making. doi 10.1186/1472-6947-12-67. http //www.biomedcentral.com/content/pdf/1472-6947-12-67.pdf Nahata, B., Ostaszewski, K., Sahoo, P. (2005). Rising health care expenditures A demand-side analysis. Journal of Insurance Issues, 28, 88-102. 

So, before the rent is paid, the City Solicitor places a small chopping block on the table. A clerk hands him a bundle of sticks. Then, having chopped some with the billhook and some with the hatchet, he presents both tools to the King s Remembrancer, who formally accepts them as payment of the Shropshire rent. A written acknowledgment follows later. Actually the Crown only gets the billhook and hatchet each year. The horseshoes and nails are kept to serve as hardy ceremonial annuals. 

As noted in chapter 2, a Treasury bond can be seen as a bundle of individual zero-coupon securities, each maturing on one of the bond s cash flow payment dates. In this view, the Treasury s price is the sum of the present values of all the constituent zero-coupon bond yields. Assume that the spot rates for the relevant maturities—ri,r2,rg,.rj f—can be observed. If a bond pays a semiannual coupon computed at an annual rate of C from period 1 to period N, its present value can be derived using equation (16.7). 

Ausubel Milgrom [7] have described a proxy-agent variation on /Bundle, in which bidders must submit preferences to proxy agents that submit ascending bids to an auction. The auction terminates with the VCG payments... 

Procurement auctions where bidders are asked to submit a collection of price-quantity pairs, for example, 4 a unit for 100 units 3.95 a unit for 200 units, etc., are also examples of combinatorial auctions. Here each price-quantity pair corresponds to a bundle of homogenous goods and a bid. If the goods are endowed with attributes like payment terms, delivery, and quality guarantees, they become bundles of heterogenous objects. Davenport and Kalagnanam [21] describe a combinatorial auction for such a context that is used by a large food manufacturer. Davenport et al. [20] describe the procure-... 

Bundles should be designed and priced according to the evidence-based historical price and cost data. Bundle definition should include information on episode triggers and end points, patients and providers that would be included in the bundle, and factors that cause a patient or service to be removed from a bundle. The price must be lower than the total FFS payments for the episode, but sufficiently high to ensure adequate compensation to the providers. 

Once a bundle has been created, billing and payment systems need to be modified using the bundle as the unit of billing. Patient registration process would need modification, to identify patients by bundle. Patients must be made aware of bundle-billing, claims, and distribution processes. 

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