Policy Implications in Managing Risk under Bundled Payment
Under episode-based bundled payment systems, a provider contacting organization is paid a fixed amount for all care required by patients who meet the definition of the episode. Since no definition of episodes results in a totally homogeneous group of patients, cost of individual patients vary, and therefore the contacting organization is subject to random variations in its average per-patient cost depending on which patients are included in its episodes. As bundled payment models evolve, two different methods of managing these types of variations appear to have emerged.