Bringing patient incentives into the bundled payments model: Making reimbursement more patient-centric financially

ABSTRACT

In this era of patient centricity, this article makes the simple and straightforward case for including patients in bundled payment (BP) financial incentives. We begin by briefly reviewing the key frameworks and models for provider reimbursement, including activity-based costing, cost plus pricing, diagnosis-related group classification, Medicare Cost Plus, and resource-based relative value scale. Given these previous approaches, we argue that, in many ways, the BP model is an exemplar of reimbursement innovation. We then explore key elements of incorporating payoffs for patients, including care redesign, continuum of care, core competencies, cost cutting, applying metrics, and creating a collaborative BP network. The article concludes by discussing future challenges and opportunities for embedding patient financial incentives within the BP model. The high level of political and regulatory uncertainty at the state and federal levels makes this a ripe time for experimenting with financially compensating patients for their role in helping providers accomplished the key metrics required for BP compensation. Bringing patients into the fold financially holds the potential to solidify episode-based payments as a fundamental element of the alternative payment models promoted by Centers for Medicare & Medicaid Services (CMS) and private payers.

KEYWORDS:

• Bundled payments
• financial incentives
• healthcare value
• patient-centric
• reimbursement models

Notes on contributors

Dr James J. Gillespie, PhD, JD, MPA, is President of the Center for Healthcare Innovation. His research has appeared in Academy of Management Review, American Behavioral Scientist, European Journal of Social Psychology, Federal Reserve Bank, Harvard Business Review, Human Resource Development Review, and Strategic Management Journal. His current healthcare scholarship focuses on (i) analytics/informatics, (ii) economics/finance, and (iii) innovation/transformation. Dr Gillespie previously taught at Illinois Institute of Technology, Northwestern University, University of Illinois System, University of Maryland System, and University of Wisconsin System. His education includes Northwestern University Kellogg School of Management, MA, PhD; Harvard University School of Law, JD; Princeton University Woodrow Wilson School of Public Policy, MPA; Massachusetts Institute of Technology, BS; and Carnegie Mellon University.

Gregory J. Privitera, PhD, is a Professor and Chair of the Department of Psychology at St. Bonaventure University where he is a recipient of their highest teaching honour, The Award for Professional Excellence in Teaching, and their highest honour for scholarship, The Award for Professional Excellence in Research and Publication. He also periodically teaches analytics courses in the School of Business. Dr Privitera received his PhD in Behavioral Neuroscience at the State University of New York at Buffalo, and completed postdoctoral work at Arizona State University. He has authored over a dozen books on topics related to statistics, methodology, and health. He has further published dozens of peer-reviewed papers on topics related to the global socio-psychological, policy, and clinical impact of obesity and mental health on strategically managing efficiencies for diagnosis, treatment, and cost, largely in healthcare settings. He is an award-winning textbook author, and his research was recognized nationally by the American Psychological Association in 2015.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

James J. Gillespie http://orcid.org/0000-0002-1643-0086