Springer Publishing Company is excited to share Part 1 of a three part series on navigating bundled payments for the healthcare professional. Susan J. Penner, RN, MN, MPA, DrPH, CNL, and author of, Economics and Financial Management for Nurses and Nurse Leaders, Second Edition, 2013, and adjunct faculty at the University of San Francisco School of Nursing and Health Professions, explains below why you or your institution should consider bundling a payment. If you work in health care, you may have heard the term bundled payment.  Do you know what it means?  Do you know how bundled payments may affect you and your institution?  If the answer to any of these questions is “no,” then you need this information. Bundled payments developed as an innovative model for reimbursing healthcare services.  This innovation was implemented with the passage of the Affordable Care Act (ACA) in 2010.  Bundled payments combine the reimbursement for all healthcare providers over a patient’s entire episode of care, that includes all events and services to treat a specified diagnosis.  For example, patients who have total hip replacement surgery not only need inpatient hospital care, but they often need rehabilitation and home health care.  In a bundled payment model the surgeon, hospital, rehabilitation and home health services are reimbursed together, rather than these providers billing separately. Why change the longstanding tradition of separate billing and payment for healthcare services?  Traditional medical billing and payment is volume-based.  In other words, the more hip replacements that surgeons perform, the more they can bill for.  If the hip replacement procedures are more costly than necessary, the surgeons still get reimbursed.  If the patient suffers complications following hip replacement surgery, the added days in the hospital and hospital readmissions are reimbursed.  Providers are rewarded for doing more, but not for doing better, and not for working together to improve patient care. When payments are bundled over an entire episode of care, the incentives change.  Providers must deliver services within a fixed budget that is shared among the physicians, hospital and others such as home health agencies and skilled nursing facilities.  Providers risk losing money unless they work together to reduce complications, length of stay and preventable readmissions.  If providers can work together to save money while maintaining high quality, a portion of the savings are distributed back to them.  Providers are rewarded for doing better, not just doing more. Part 2 of this series presents an example of an evidence-based case rate (ECR) that is used to budget for bundled payments, and to estimate shared savings, the savings providers can keep, across an episode of care.  More information is available at the Center for Medicare & Medicaid Innovation (the CMS Innovation Center) website.  My book is also a resource for learning more about bundled payments and other health care finance topics.  Be sure to watch for the next post in this series!