By Andrei Gonzales, M.D., AVP, Product Management, Value Based Payments, Change Healthcare
In the continuing effort to increase quality and decrease costs, health plans and providers are shifting from volume-based care (fee for service) to a value-based reimbursement structure (fee for value). Value-based reimbursement promises benefits to patients, providers, and health plans, as it encourages delivery of high quality care at the lowest cost, largely by improving clinical and administrative efficiency.
This paradigm shift to value-based reimbursement creates increasingly complex reimbursement scenarios for health plans. According to a “Journey to Value” study Change Healthcare commissioned, an overwhelming 97% of health plans and 91% of hospitals are now deploying a complex mix of value-based reimbursement and fee-for-service reimbursement. Health plans and hospitals see bundled payment as the fastest growing value-based payment model and predict that bundled payment will account for 17% of reimbursements in the next five years.
Bundled payment uses care episodes as a foundation for payment models, but an “episode of care” is itself not a new idea. Obstetrical care, surgical care, and even diagnosis-related groups (DRGs) are long-held examples of clustered services with care pathways, process and quality measures, and specific outcomes. Despite the fact that they have been in use for decades, the rise of bundled payment as a popular value- based reimbursement model is leading some in healthcare to equate bundles and episodes as synonymous.