Americans spend a lot of money on healthcare. Healthcare spending in the United States has crossed $3.7 trillion, which is more than the entire economies of all but 4 countries. In addition to the cost of care itself, a major factor driving the high prices is the existing model of the healthcare payment system, which is called the fee-for-service model.  

Under the fee-for-service model of payments, a provider gets paid for every single aspect of care. For example  - when a man goes to a clinic for a consultation, he is prescribed some tests or sometimes might even be asked to get some scans. Subsequently, when the results arrive, they may or may not be definitive. If they are not, then the man would probably be asked to take more tests. Later on, he will be recommended appropriate treatments which are outpatient in nature, or through medication. In this entire scenario, each provider gets paid for the consultation, prescribed tests, and the treatment. This is the existing system and is called fee-for-service because the provider gets paid for every service.

In light of the fact that the costs of care have been rising steadily, the fee-for-service model has attracted lots of criticism from people and policymakers alike. Among many health payment systems examined, the system of bundled payments has shown great promise in lowering medical costs. This is one of the healthcare payment systems that is meant to help bring down the skyrocketing costs of medical care.

Bundled payments are reimbursements made to multiple providers for coordinating the care services for a single, pre-determined episode of care. For example - if a man needs to get a knee replacement surgery, the process requires a surgeon, an anesthesiologist, a radiologist, an orthopedic doctor for consultation, and a physiotherapist after the surgery. Under the fee-for-service model, each of the above-mentioned providers would be reimbursed separately. But under a bundled payments model, all of them would coordinate on the care process and determine the amount before the surgery. This model is known to generally work out cheaper than the fee-for-service model. It is better suited for a pre-determined episode of care deemed necessary by a provider. In this example, it was a man who needed a knee replacement surgery. It could also be a heart operation, or any other extensive, invasive procedure.

At a time when healthcare costs are rising, both people and policymakers have been pushing for value-based payment systems that not only improve the outcomes but also lower the costs. Bundled payments are largely seen as a shift from the fee-for-service system to a value-driven model. As more providers and payers agree on the bundled system, medical technology companies have also unveiled relevant healthcare payment solutions to streamline the process of payment. The payments software solutions make it easier for patients to make out-of-pocket payments, and for payers and providers to process them. 

To sum it up, adopting the bundled payments model is a great step forward in the shift towards a value-based model of reimbursement. It makes care more equitable and the payments more simplified.