A bundled payment is the reimbursement of healthcare providers, such as hospitals and physicians, on the basis of expected costs for clinically-defined episodes of care. A bundled payment is also known as an episode-based payment, case rate, package pricing and episode-of-care payment.
Bundled payments have been described as the middle ground between fee-for-service reimbursement and capitation. They have been proposed in the healthcare reform debate as a strategy for reducing healthcare costs, especially during the Obama administration. The advantages of bundled payments include discouraging unnecessary care and encouraging coordination across providers.updated February 15, 2012