What does the term "bundled payments" mean in billing?

Bundled payments refer to the practice of combining several related services into a single payment. This means that rather than billing separately for each individual service provided during a patient’s care—for instance, consultations, diagnostic tests, and treatment procedures—there is one comprehensive payment that covers all these related services. This approach is designed to improve care coordination and reduce overall healthcare costs by incentivizing providers to offer efficient and comprehensive care.

The bundled payment model encourages healthcare providers to work collaboratively to deliver treatments that are necessary for a specific condition or episode of care. By simplifying the billing process and creating a predictable cost structure for patients and payers alike, bundled payments help ensure that patients receive all necessary services without surprise charges related to individual services being billed separately.

This model contrasts sharply with payment methods that involve unrelated services being charged individually or systems that might involve advance payments for services not yet rendered. It emphasizes alignment around a patient's specific healthcare needs, streamlining both the financial process and the quality of care delivered.