Understanding Bundled Payment: What Is It, And How Does It Help Me?

There’s no simpler way to put it: Medical bills are confusing, and if you’ve had a procedure or treatment that involves multiple healthcare providers and services, like a surgeon, anesthesiologist and rehab specialist, the confusion just keeps growing. 

If misery loves company, you might be glad to know you’re not alone. In fact, a report from the Consumer Financial Protection Bureau found about 43 million Americans have some sort of medical debt on their credit report, and the bureau says a lot of that debt is incurred because consumers simply don’t understand what the bills are for or how to question or refute their charges.

Consumers aren’t the only ones flummoxed by the complexity of medical billing. It’s confusing for the insurance companies and healthcare providers as well. And sometimes, that confusion results in billing errors from miscoding, double billing, and other relatively common mistakes. Studies put the number of medical billing errors anywhere from about 7% to a whopping 80%, and a lot of those errors stem not from an intent to deceive, but from plain confusion over who’s billing for what.

At Muve Health, we work with some of our payer partners to eliminate that complexity with bundled payments, assessing a “flat fee” for surgical total joint replacement procedures performed at our centers so patients, payers and providers know upfront what the charges will be - no questions, no confusion. In a bundled payment system (sometimes referred to as value based care), many of the headaches and frustrations associated with the traditional fee-for-service payment model can be mitigated. Instead of receiving a pages-long bill - or several bills - with long lists of codes or mysterious-sounding services that can be difficult to decipher, all the costs of the surgical procedure are “rolled into one.” And that makes it a lot easier to plan for those costs even before the surgery takes place, whether you’re a patient, a payer or even a provider.

What are bundled payments?

One of the main advantages of bundled payments, for patients, payers and providers, is the ability to plan for costs before services are rendered. As patients, few of us see the complete bill with all of the charges and costs enumerated; and because the costs of each patient’s care can vary considerably, in a traditional fee-for-service payment model, there’s no way to know upfront what the total costs will be - and no way to really plan for those costs.

As a payer, it’s little better. Sure, you get to see the fully-enumerated bill - but then you need to sift through all the charges to make sure they’re billed and reimbursed correctly - always with the risk that some costs or services may be duplicated, inflating the final cost and the amount due from the payer (and the patient.)

In a bundled payment model, the fee for your service is set upfront. Rather than determining a rate for each individual service, specialist or item, a bundled payment establishes a flat rate for the entire procedure, from start to finish (or for a medical treatment performed over a set period of time referred to as an "episode of care"). In prospective bundled payment models, providers and payers work together to agree to what’s included in the bundle and the cost of each joint replacement procedure based on future projections. As a result, it’s can be much easier for both parties to plan for their own costs and revenue well in advance. Bundled payment models also help patients compare one provider to another to ensure they’re getting the best value for their needs, and because a single payment is for a complete service, they also promote better coordination among the individual service providers.

Surprise! No surprises!

What happens if an unexpected issue pops up that results in increased or additional fees? At Muve Health's Total Joint Replacement centers, in cases when we are working within a prospective bundled payment agreement, we cover those costs ourselves, without passing them on to the patient or to the payer. As a forward-thinking healthcare innovator, we are aiming to ultimately fully adopt and implement the bundled payment model with as many payer partners as possible in the near future.

In fact, bundled payment plans offer so many benefits for patients, payers and providers, you might wonder why so few providers offer the flat-fee option. The answer is pretty simple: It takes a lot of work to develop a model that’s accurate and that works for everyone. Our bundled payment model is no exception - it took a lot of work and dedication to design it. But in the end, we believe it’s proven to be a worthwhile effort for everyone involved.

**Professional Services are provided by independent physicians and not by Muve Health.