Modern healthcare contracting is shifting the
responsibility for improving quality, enhancing community health
and controlling the total cost of care for patient populations from
payers to providers. Population-based contracting involves capitated
risk taken across an entire population, such that any included services
within the contract are paid for by the risk-bearing entity throughout
the term of the agreement. Under such contracts, a risk-bearing entity,
which may be a provider group, a hospital or another payer, administers
the contract and assumes risk for contractually defined services.
These contracts can be structured in various ways, from professional
fee capitation to full global per member per month diagnosis-based
risk. The entity contracting with the payer must have downstream
network contracts to provide the care and facilities that it has
agreed to provide. Population health is a very powerful model to
reduce waste and costs. It requires a deep understanding of the nuances
of such contracting and the appropriate infrastructure to manage
both networks and risk. Cite this article:
Episodic, or bundled payments, is a concept now
familiar to most in the healthcare arena, but the models are often
misunderstood. Under a traditional fee-for-service model, each provider
bills separately for their services which creates financial incentives
to maximise volumes. Under a bundled payment, a single entity, often
referred to as a convener (maybe the hospital, the physician group,
or a third party) assumes the risk through a payer contract for
all services provided within a defined episode of care, and receives
a single (bundled) payment for all services provided for that episode.
The time frame around the intervention is variable, but defined
in advance, as are included and excluded costs. Timing of the actual payment
in a bundle may either be before the episode occurs (prospective
payment model), or after the end of the episode through a reconciliation
(retrospective payment model). In either case, the defined costs
over the defined time frame are borne by the convener. Cite this article:
