Episode-Based Bundling

Episode-based bundling pays providers a single pre-set amount for the services involved to treat a patient’s health event, or for an episode of care, such as a knee replacement or coronary artery bypass graft.18 The health event is generally defined by a procedure and/or diagnosis and has an established beginning and end. Payment amounts are set based on established clinical protocols and guidelines, and are typically adjusted to account for the severity of the patient’s condition. Compared to global bundling, episode-based bundling is a tool for managing costs incurred over a shorter time period, usually beginning with initial treatment of the health event and ending 30 or 90 days after the procedure or treatment involved. Other terms used to describe the concept of episode-based bundling include episode-based payment and episodic bundling. Relevant Federal Legislation or Regulation: Demonstration Project to Evaluate Integrated Care around a Hospitalization, ACA § 2704. Authorizes demonstrations, in up to eight states and over four years, to evaluate the use of bundled payments for the provision of integrated care for a Medicaid beneficiary for an episode of care that includes hospitalization and physician services. This demonstration is not currently funded.