Bundled payment
A bundled payment is a single payment for all services related to an episode of care, replacing separate per-service payments for each provider involved.
Updated
A bundled payment is a payment model in which a single, predetermined amount is paid for all or most services furnished during an episode of care — for example, a joint replacement spanning pre-op, the procedure, and post-acute recovery — rather than a separate fee for each service each provider delivers. The bundle shifts the financial risk of total episode cost onto the participating providers, who share in savings or losses against the target price.
Bundled payment models have been tested and operated by Medicare's Center for Medicare & Medicaid Innovation and adopted by commercial payers. The exact scope of the bundle (which services are included) and the risk arrangement (upside-only or upside-and-downside) vary by model.
In practice
For billing, a bundled payment changes how the episode is reconciled rather than how each individual claim is submitted: claims are still filed per service, but the payer reconciles total episode spending against the bundle price retrospectively. A practice in a bundled arrangement must therefore track episode-level costs, not just per-claim adjudication, and document in a way that supports the episode definition.
Commonly confused with
- Fee-for-service: Fee-for-service pays separately for each service furnished; a bundled payment pays one amount for the whole episode. A bundled model often still runs on fee-for-service claims that are reconciled to the bundle price.
- Accountable Care Organization: An ACO holds a group accountable for total cost across a population over time; a bundled payment targets a single defined episode of care. They are distinct value-based payment shapes.