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How Bundled Payments May Improve Health Care

Imagine you’re enjoying a night out at your favorite restaurant. After you place your drink order, the waitress stops by with a check for the beverage. When your water glass is refilled, another check appears. When your appetizer arrives, you get another check — and they just keep coming. By the end of the meal, you’re so overwhelmed by a tableful of separate bills that you skip dessert.

As crazy as that situation would be in a restaurant, it’s often the way you’re charged for health care services. If you have a major procedure or surgery, you can easily become overwhelmed with invoices and payment notices for every treatment, appointment or test, all payable to different care providers.

Fortunately, there is a new approach to reimbursing health care providers, called bundled payments. Instead of billing for each service, health care providers and facilities are reimbursed for what’s referred to as a “defined episode of care.” Here’s an example: let’s say you have knee replacement surgery. Instead of receiving bills from, the surgeon, the anesthesiologist, the facility, the knee hardware company and the facility, the entire surgery will be “bundled” at one flat fee. The member would receive a single explanation of benefits for their out of pocket costs only.

It’s an approach that aligns with value-based care, in which providers are paid for quality rather than quantity. With bundled payments, care providers are reimbursed for the expected cost of an entire treatment program rather than each piece, placing the focus on the outcome rather than individual services. UnitedHealthcare is committed to value-based care, which is designed to help improve health outcomes and lower costs by putting a greater emphasis on quality and care coordination. The approach strives for the “triple aim” of better care, improved health management and lower health care costs.

While there’s no denying the convenience factor of bundled payments, it has other added benefits. There are indications that this care payment program can have a positive effect on health outcomes. UnitedHealthcare recently conducted an analysis of results from its value-based care program for knee, hip and spine procedures. They found the bundled payment program achieved a 22 percent reduction in hospital readmissions and 17 percent fewer complications.

Infographic: Spine and joint bundled payment information

“By effectively coordinating patient care among the primary care provider, the surgeon, hospital and health plan, we can improve postoperative care, reduce readmissions and enhance outcomes and the patient experience, leading to healthier communities,” said Mark Carley, vice president of managed care and payor relations for Centura Health, which has participated in the bundled payment program since 2016.

There were also significant cost-savings. Individuals saved through the program more than $3,000 per operation, and the savings for participating employers has so far totaled nearly $18 million, an average of $18,000 per procedure.

“This program is one example of reshaping how health care is delivered,” said Dr. Sam Ho, chief medical officer of UnitedHealthcare. “We’re helping to enhance care coordination, improve outcomes and deliver greater value.”

If you’d like to learn more about how bundled payments could help you experience better health outcomes, save money and simplify the health care experience, talk to your health insurance company about value-based care as part of your insurance plan.

Click here to learn more about how UnitedHealthcare’s spine and joint solution.