What does "bundled payments" refer to in healthcare?

Bundled payments in healthcare refer to a single payment that covers a group of related services provided during a specific episode of care. This approach is designed to encourage efficiency and coordination among providers, typically covering all services related to a treatment or condition, such as hospitalization, surgery, and post-operative care. By combining multiple services into one payment, bundled payments aim to reduce costs, promote the delivery of high-quality care, and simplify the reimbursement process for providers. This model contrasts with fee-for-service structures, where payments are made individually for each service rendered. Bundled payments incentivize healthcare providers to focus on the overall outcome of care rather than the volume of services delivered.