Abstract
Medicare typically spends as much or more in the 90 days after discharge as it does for the initial hospitalization, and post-acute care spending varies widely. This variation highlights opportunities for bundled payments to help improve quality and reduce spending.
For nearly 50 years, Medicare has operated separate payment systems for hospitals, clinics, physicians, post-acute care facilities, and other categories of health care providers, with few incentives for coordinating care across the continuum of services. These systems support a fragmented delivery system at substantial cost to taxpayers and Medicare beneficiaries.
Policy analysts have long been interested in encouraging improved efficiency and care coordination by bundling Medicare payments for a range of services delivered during defined episodes of care.
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For example, an episode-based payment for total joint replacement could include the inpatient admission and professional services, plus skilled nursing, home health . . .