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A Bundled Payments Success Story For Patients, Providers, And Plans

posted by Alicia Caramenico

on March 28, 2016

While helping consumers choose the right coverage, health plans are working to make coverage as affordable as possible by driving health care delivery reforms. The bundled payment model is one such health plan innovation that is successfully promoting affordability and quality for patients, health care providers, and health insurance plans.

Under the bundled or episode-based payment model, all of the health care services related to a specific procedure, disease diagnosis or health event are included in one bundled payment amount. For example, a bundled payment for a total knee replacement could include physician and hospital services before, during and after surgery; ancillary drugs and laboratory tests; and any associated complications and resulting treatment.

To see how it works in practice, we can look to Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ) and its innovative Episodes of Care (EOC) Program. The health plan collaborated with doctors in five different specialty areas to determine episode components and quality of care outcomes – all of which led to best practices for cost-efficient, high-quality care delivery.

Horizon BCBSNJ found that in 2014, patients in EOC practices had fewer hospital readmissions compared to patients receiving the same services from a non-EOC practice. There were 100 percent fewer hospital readmissions for knee arthroscopy and 37 percent fewer hospital readmissions for hip replacement.

The results and the response to this type of value-based initiative have been strong.  As a gastroenterologist in Horizon BCBSNJ’s Colonoscopy EOC said in an announcement, “The Episode of Care model is a game changer in the progress from fee for service to value-based contracting. By tying financial incentives to quality, it improves the care of the patient while also decreasing costs.”

Like Horizon BCBSNJ, health plans are continuing to partner with doctors and hospitals to move away from the outdated fee-for-service system toward innovative value-based models that focus on paying for improved patient care and not volume of services provided.