Dr. Rachel Hess, Professor of Population Health Sciences, explains how bundled payments work and how they can help lower overall health care costs.">

Mar 24, 2017 — Traditionally, health care costs through insurance companies have been billed to patients with a fee-for-service model, but that's changing. Health care providers are combining services for an episode of care and treatments into a single payment, with the overall goal of better patient outcomes and lower costs. On this Health Minute, Dr. Rachel Hess, Professor of Population Health Sciences, explains how bundled payments work and how they can help lower overall health care costs.

Interview

Announcer: "The Health Minute" produced by University of Utah Health.

Interviewer: Bundled Payments, some people think that they could help reduce healthcare costs, but what are bundled payments and how exactly would they do that? Dr. Rachel Hess is Professor of Population Health Sciences at University of Utah Health. Help me understand the term "bundled payment."

Dr. Hess: Under traditional fee-for-service, patients, through their insurers, pay for each unit of care that they receive. Health systems are incented to deliver more units for more payments. With bundled payments, the patient, through the insurer, pays one amount for an entire episode of care like a surgery or even up to all the care that they get for a year and payments can be tied to quality. Healthcare systems are incented over the long-term to use more preventive care and services like nutrition classes, for example, to keep you healthier. Over time, the idea is that healthier people cost less money and overall healthcare costs go down.

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